<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 17, 1996
REGISTRATION NO. 333-15783
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
AMENDMENT NO. 2
TO
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------------
US UNWIRED INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
LOUISIANA 4812 72-0647424
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
</TABLE>
CM TOWER, SUITE 1900
ONE LAKESHORE DRIVE
LAKE CHARLES, LA 70629
(318) 436-9000
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
WILLIAM L. HENNING, JR.
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
P.O. DRAWER 3104
LAKE CHARLES, LA 70602-3104
(318) 436-9000
(Name and address, including zip code, and telephone
number, including area code, of agent for service)
Copies to:
<TABLE>
<S> <C> <C>
ANTHONY J. CORRERO, III THOMAS G. HENNING BRYANT B. EDWARDS
LOUIS Y. FISHMAN SECRETARY AND GENERAL COUNSEL LATHAM & WATKINS
CORRERO FISHMAN HAYGOOD MERCURY, INC. 633 W. FIFTH STREET, SUITE 4000
PHELPS WEISS WALMSLEY P.O. DRAWER 3104 LOS ANGELES, CALIFORNIA 90071-2007
& CASTEIX, L.L.P. LAKE CHARLES, LA 70602-3104 (213) 485-1234
201 ST. CHARLES AVENUE, SUITE 4700 (318) 436-9000
NEW ORLEANS, LOUISIANA 70170-4700
(504) 586-5252
</TABLE>
---------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement.
---------------------
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
---------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE> 2
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* INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A *
* REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE *
* SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR *
* MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT *
* BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR *
* THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE *
* SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE *
* UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS *
* OF ANY SUCH STATE. *
*******************************************************************************
SUBJECT TO COMPLETION, DATED JANUARY 17, 1997
1,700,000 SHARES
[US UNWIRED INC. LOGO]
CLASS A COMMON STOCK
All of the shares of Class A Common Stock, par value $.01 per share ("Class
A Common Stock"), being offered hereby (the "Offering") are being sold by US
Unwired Inc. (the "Company"). Prior to this Offering, there has been no public
market for the Class A Common Stock. See "Underwriting" for information relating
to the factors considered in determining the initial public offering price. It
is currently anticipated that the initial public offering price will be between
$11.00 and $13.00 per share.
The Company's authorized common stock includes Class A Common Stock and
Class B Common Stock, par value $.01 per share ("Class B Common Stock" and,
together with Class A Common Stock, "Common Stock"). The rights of Class A
Common Stock and Class B Common Stock are substantially identical, except that
holders of Class A Common Stock are entitled to one vote per share and holders
of Class B Common Stock are entitled to 10 votes per share. Both classes will
vote together as one class on all matters generally submitted to a vote of
shareholders, including the election of directors. Shares of Class B Common
Stock are convertible into Class A Common Stock on a share-for-share basis
subject to certain procedures and restrictions. See "Description of Capital
Stock." After the sale of the shares of Class A Common Stock offered hereby, the
Company's existing shareholders will own shares of Common Stock representing in
the aggregate approximately 98.5% of the voting power entitled to vote in
matters affecting shareholders generally.
Application has been made to have the Class A Common Stock quoted on the
Nasdaq National Market under the symbol "UNWR."
---------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 9 FOR CERTAIN INFORMATION THAT SHOULD
BE CONSIDERED BY PROSPECTIVE INVESTORS.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
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PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT(1) COMPANY(2)
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share........................ $ $ $
- ------------------------------------------------------------------------------------------------
Total(3)......................... $ $ $
================================================================================================
</TABLE>
(1) See "Underwriting" for a description of the indemnification arrangements
with the Underwriters.
(2) Before deducting expenses estimated at $500,000, which will be paid by the
Company.
(3) The Company has granted to the Underwriters a 30-day option to purchase up
to 255,000 additional shares of Class A Common Stock solely to cover
over-allotments, if any. If such option is exercised in full, the total
Price to Public, Underwriting Discount and Proceeds to Company will be
$ , $ and $ , respectively. See "Underwriting."
---------------------
The shares are being offered severally by the Underwriters named herein,
subject to prior sale, as and if received and accepted by them, subject to their
right to reject orders, in whole or in part, and to certain other conditions. It
is expected that delivery of share certificates will be made on or about
, 1997.
[THE ROBINSON-HUMPHREY COMPANY AND A.G. EDWARDS AND SONS LOGOS]
, 1997
<PAGE> 3
[US Unwired logo]
[Five colored maps depicting clusters and including interstates and
highways therein]
Kansas Cluster
Mississippi Cluster
PCS Markets
Louisiana Cluster
PCS Markets
Alabama Cluster
[Legend for the maps displaying corresponding colors for each of the
following: Louisiana Cluster, Mississippi Cluster, Alabama Cluster, Kansas
Cluster, PCS Markets and Interim Operating Authority]
<PAGE> 4
CERTAIN TERMS
Wireless communications markets in the United States include (among others)
cellular markets and, more recently, Personal Communications Service ("PCS")
markets and are licensed and regulated by the Federal Communications Commission
(the "FCC"). The cellular markets are geographically divided into 306
Metropolitan Statistical Areas ("MSAs") and 428 Rural Service Areas ("RSAs")
devised by Rand McNally and adopted by the FCC. The PCS markets are similarly
divided into 51 Metropolitan Trading Areas ("MTAs") and 493 Basic Trading Areas
("BTAs"). The Company anticipates that PCS service will appear essentially the
same to the user as cellular service, except for certain issues of compatibility
when subscribers leave (or "roam" out of) the licensed area covered by the
wireless communications "System" of their service provider. Cellular and PCS
markets are sometimes measured by "Pops," which means the estimated population
of the specified market; and "Net Pops," which means such population multiplied
by the percentage interest the Company holds in the license for the particular
market. The number of Pops or Net Pops does not refer to subscribers and is not
necessarily indicative of the number of subscribers to the Company's Systems.
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission"), a Registration Statement on Form S-1 under the Securities Act of
1933, as amended (the "Securities Act") with respect to the Class A Common Stock
offered hereby. This Prospectus does not contain all of the information set
forth in the Registration Statement including the exhibits and schedules
thereto. For further information with respect to the Company and the Class A
Common Stock, reference is hereby made to such Registration Statement and the
exhibits and schedules thereto. Statements contained in this Prospectus as to
the contents of any contract or other document are not necessarily complete and,
in each instance, reference is made to the copy of such contract or document
filed as an exhibit to the Registration Statement, each such statement being
qualified in all respects by such reference. Upon consummation of this Offering,
the Company will be subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith the Company will file periodic reports and other information with the
Commission relating to its business, financial statements and other matters.
Copies of the Registration Statement, including all exhibits thereto, may be
obtained from the Commission's principal office in Washington, D.C. and at the
following regional offices of the Commission: Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661-2511 and at Seven World Trade
Center, Suite 1300, New York, New York 10048. Copies of all or any part thereof
may be obtained from the Public Reference Section, Securities and Exchange
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549 upon payment of the
prescribed fees. The Commission maintains a World Wide Web site on the Internet
which contains the foregoing information and the address of which is
"http://www.sec.gov."
The Company intends to furnish its shareholders annual reports containing
consolidated financial statements of the Company audited by its independent
auditors and quarterly reports containing unaudited condensed consolidated
financial statements for each of the first three quarters of each fiscal year.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE CLASS A COMMON
STOCK OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE
OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET, IN
THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
2
<PAGE> 5
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information (including the financial statements and the notes thereto) included
elsewhere in this Prospectus. Unless otherwise indicated, all references to the
"Company" include it and its subsidiaries and their respective predecessors.
Except as otherwise indicated, the information in this Prospectus assumes no
exercise of the Underwriters' over-allotment option. Except for historical
financial information and unless otherwise indicated, all references herein to
Pops, Net Pops and the Company's Systems give effect to the consummation of the
Company's acquisition of 49% of the capital stock of Mississippi 34 Cellular
Corporation ("MS 34"). The acquisition is contingent upon, among other things,
the successful completion of this Offering.
THE COMPANY
The Company owns and operates cellular communications systems in 14 RSAs
and one MSA which, after giving effect to the acquisition of MS 34, together
have 1.4 million Net Pops. These markets consist primarily of four clusters that
are located in Louisiana, Mississippi, Alabama and Kansas. In its Louisiana
Cluster, the Company markets under the MERCURY CELLULAR AND PAGING(TM) trade
name and in its other clusters under the CELLULARONE(R) service mark. As of
September 30, 1996, the Company served approximately 77,000 cellular subscribers
through cellular Systems covering more than 72,000 square miles, and served over
14,000 paging subscribers by providing paging services in its Louisiana market
and by reselling such services in certain other markets. The Company owns a
24 1/3% limited partnership interest in Meretel Communications Limited
Partnership (the "PCS Partnership"), which, as the successful bidder in the FCC
auction, has been awarded five broadband PCS licenses that cover five BTAs with
an aggregate of 1.8 million Pops. These PCS markets, together with the Louisiana
Cluster cellular market, are expected to create a large seamless market
traversed by Interstate Highway 10 ("I-10") between Houston and New Orleans. The
Company also owns a 50% interest in Mercury Mobility, L.L.C. ("Mobility"), which
was the high bidder for 22 broadband PCS licenses that cover 22 BTAs with an
aggregate of 4.9 million Pops in areas contiguous to the Company's existing
markets. See "PCS Operations."
The Company focuses on RSAs and small MSAs because it believes that such
markets, which are usually less densely populated, generally provide greater
capacity for growth and less competition than most major markets. Cellular
service was generally introduced later in RSAs and small MSAs than in major
markets, with the result that, based on industry averages, cellular penetration
is currently lower and subscriber growth rates are significantly higher than in
major markets. The Company's markets exhibit positive characteristics for
wireless communications, including a high percentage of business customers with
substantial needs for wireless communications, such as those employed in the
agriculture and oil and gas industries, and a higher percentage of populations
accustomed to long travel times. Additionally, the Company's cellular service
areas cover approximately 1,100 highway miles, providing attractive sources for
roaming revenues.
The Company believes that the wireless communications industry will
continue to grow as enhanced services are offered at lower prices and as
customer awareness of the productivity, convenience and security benefits
associated with wireless communications increases. The Company believes it is
well positioned to take advantage of this growth opportunity. The Company's
growth strategy focuses on the following: (i) internal growth through increased
penetration in the Company's existing markets; (ii) acquisition of licenses
contiguous to the Company's existing market clusters from independent or smaller
licensees; (iii) acquisition of new market clusters; and (iv) acquisition of PCS
licenses, where available, to expand and complement its wireless network. In
addition, the Company believes that by geographically clustering service areas
it can offer high quality service at competitive prices with larger, seamless
service networks.
Since January 1, 1995, the Company has completed acquisitions of the Kansas
and Alabama Clusters, representing approximately 600,000 Net Pops. Upon
acquiring a cellular System, the Company's objective is to increase operating
cash flow by (i) emphasizing the Company's dedication to customer service and
satisfaction; (ii) implementing aggressive marketing of cellular service to add
subscribers and reduce the "churn rate" at which customers terminate service;
(iii) selectively upgrading the existing cellular network to increase signal
coverage, with the eventual goal of providing handheld quality network coverage;
3
<PAGE> 6
(iv) implementing the Company's distribution strategy, which seeks to maximize
the Company's local market presence through local retail stores with a direct
sales force; and (v) using its centralized upper management and back office
functions to support the needs of subscribers and of the Company's retail sales
offices, thereby maximizing economies of scale.
The Company seeks to position its cellular Systems, including its local
retail stores, as the quality local service provider. Management believes that
the Company's local presence through its retail stores enhances its ability to
provide a higher level of long-term customer service and satisfaction. The
Company's 22 retail stores are staffed with both sales and customer service
representatives, differentiating the Company from many of its competitors which
provide neither the same concentration of local sales locations nor the local
availability of customer service. The retail stores provide the Company with
greater control over the sales process than would be provided by the use of
independent agents alone, although the Company does use independent agents on a
selective basis to expand its distribution network. In addition, the Company's
billing and customer information system is operated by an affiliated corporation
which provides the Company with a high level of customization and access. The
Company believes that these factors enable its sales and customer service
personnel to be more responsive than competitors using third-party billing and
information systems.
In preparation for this Offering, the Company and its affiliate through
common control, Cameron Communications Corporation ("Cameron"), completed a
restructuring plan pursuant to which the wireless communications interests of
Cameron were separated from its landline telephone business and combined with
the wireless communications interests of the Company. Pursuant to an Agreement
and Plan of Reorganization, Cameron transferred to a new wholly-owned
subsidiary, Newco, all of Cameron's assets and liabilities other than its 96%
interest in the subsidiary that owns the licenses covering the Louisiana and
Kansas Clusters. Cameron distributed to its shareholders all of the shares of
Newco and then merged into the Company. In consideration for this merger,
shareholders of Cameron received, in exchange for their shares of Cameron,
shares of common stock of the Company which, together with all other then
outstanding shares, have been reclassified into Class B Common Stock. Following
the restructuring, the name of Newco was changed to "Cameron Communications
Corporation," and the name of the Company, which had been Mercury, Inc., was
changed to "US Unwired Inc." See "Certain Transactions -- Tax-Free
Restructuring."
Prior to this Offering, 78.0% of the Company's equity and voting power was
held by members of the Henning family, and the remaining 22.0% was owned by
approximately 11 minority shareholders. After this Offering, members of the
Henning family will own 67.8% of the Company's equity and 76.8% of the Company's
voting power. See "Principal Shareholders." The Henning family has been involved
in the communications industry since W. T. Henning founded a landline telephone
company in 1928 in southwest Louisiana. The Henning family became involved in
the wireless communications industry with the introduction of paging services in
1980 and cellular services in 1987. The Henning family will remain in the
landline business through their majority ownership of Cameron. See "Certain
Transactions."
In the ordinary course of its business, the Company analyzes acquisition
opportunities as they come to its attention. In November and December, 1996, the
Company entered into agreements to acquire from seven minority shareholders the
remaining 49% interest in MS 34, the subsidiary which owns the cellular licenses
covering the Mississippi-3 and Mississippi-4 RSAs. The consummation of the
acquisition is contingent upon, among other things, the successful completion of
this Offering. See "Markets and Systems -- Mississippi Cluster." See "Markets
and Systems -- System Development and Expansion."
4
<PAGE> 7
CELLULAR AND PAGING OPERATIONS
The Company's cellular markets are grouped geographically and strategically
into four clusters, known as the Louisiana, Mississippi, Alabama and Kansas
Clusters. The following table summarizes certain information concerning the
Company's cellular markets.
<TABLE>
<CAPTION>
INTERSTATE
& OTHER % OF HH
COMPANY WIRELINE OR HIGHWAY WITH EBI> DATE OF
MARKET TOTAL POPS OWNERSHIP% NET POPS NON-WIRELINE MILES $35K(A) ACQUISITION
- ------------------------ ---------- ---------- --------- ------------ ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Louisiana Cluster
Lake Charles, LA MSA.... 174,000 100.0% 174,000 WL 102 46.0% Aug. 1987(b)
De Soto, LA-3 B1(c)..... 59,000 100.0 59,000 WL 115 28.1 Apr. 1991(b)
Beauregard, LA-5
B1(c)................. 142,000 100.0 142,000 WL 175 30.6 Mar. 1991(b)
--------- --------- -----
Total Louisiana....... 375,000 375,000 392
--------- --------- -----
Mississippi Cluster
Tunica, MS-1............ 170,000 100.0 170,000 NWL 69 28.4 Apr. 1993
Bolivar, MS-3(d)........ 156,000 100.0 156,000 NWL 66 25.7 Apr. 1993
Yalobusha, MS-4(d)...... 127,000 100.0 127,000 NWL 62 31.5 Apr. 1993
Washington, MS-5(e)..... 160,000 -- -- NWL 76 33.2 Jan. 1994
--------- --------- -----
Total Mississippi..... 613,000 453,000 273
--------- --------- -----
Alabama Cluster
Lamar, AL-3............. 136,000 100.0 136,000 NWL 70 30.5 May 1996
Bibb, AL-4.............. 138,000 100.0 138,000 NWL 66 29.5 Jul. 1996
--------- --------- -----
Total Alabama......... 274,000 274,000 136
--------- --------- -----
Kansas Cluster
Cheyenne, KS-1.......... 27,000 100.0 27,000 NWL 84 32.2 Apr. 1995
Norton, KS-2............ 30,000 100.0 30,000 NWL 0 27.9 Apr. 1995
Wallace, KS-6........... 20,000 100.0 20,000 NWL 39 37.2 Apr. 1995
Trego, KS-7............. 78,000 100.0 78,000 NWL 112 37.1 Apr. 1995
Hamilton, KS-11......... 85,000 100.0 85,000 NWL 17 44.8 Apr. 1995
Hodgeman, KS-12......... 42,000 100.0 42,000 NWL 12 40.1 Apr. 1995
Edwards, KS-13.......... 28,000 100.0 28,000 NWL 6 33.3 Apr. 1995
Cimarron, OK-1(e)....... 24,000 -- -- NWL 7 34.9 Apr. 1995
--------- --------- -----
Total Kansas.......... 334,000 310,000 277
--------- --------- -----
Minority Interest
Chambers, TX-21(f)...... 21,000 25.0 5,300 WL 34 50.4 Apr. 1993
--------- --------- -----
TOTAL................. 1,617,000 1,417,300 1,112
========= ========= =====
</TABLE>
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(a) The percentage of households (HH) with effective buying income (EBI) greater
than $35,000 is based on Kagan's Cellular Telephone Atlas 1995. Effective
buying income is comparable to disposable after-tax income.
(b) The Company was the original licensee in these markets.
(c) These are partitioned cellular markets.
(d) These RSAs are licensed to a corporation in which the Company currently owns
a 51% interest. The Company has entered into agreements to acquire the
remaining 49% interest. The acquisition is contingent upon, among other
things, the successful completion of this Offering. See "Use of Proceeds."
(e) The Mississippi-5 RSA and Oklahoma-1 RSA are operated under interim
authority granted by the FCC pending auction of the licenses by the FCC. The
number of Company subscribers in these RSAs is insignificant.
(f) The Texas-21 RSA is owned by a partnership in which the Company owns a 25%
interest and in which GTE Mobilnet, which operates the System, owns a 75%
interest.
5
<PAGE> 8
The Company offers its subscribers cellular, and in certain markets paging,
services and, without additional charge, offers custom calling features such as
call forwarding, call waiting, conference calling and no-answer transfer. The
Company also provides voice message storage and retrieval free of charge in the
Kansas Cluster and at nominal rates in the other clusters. The Company has
roaming arrangements with virtually every cellular carrier in North America and
is a member of North American Cellular Network ("NACN"), a wireless network
linking non-wireline cellular operations throughout the United States, Canada,
Puerto Rico and the Virgin Islands. NACN participation allows the Company to
offer convenient cellular access to the Company's subscribers when they roam
throughout the United States and Canada.
The Company began offering paging services in the Louisiana Cluster in 1980
and, through a resale agreement with another provider, in Beaumont, Texas in
1995. The Company has entered into agreements to enable it to provide regional
and nationwide paging services. As of September 30, 1996, the Company had over
14,000 paging subscribers.
PCS OPERATIONS
As the successful bidder in the FCC's C-block auction, the PCS Partnership
has been granted five PCS licenses covering 1.8 million Pops in five BTAs. These
PCS markets and the Company's Louisiana Cluster cellular market are expected to
create a large seamless market between Houston and New Orleans. The Company
intends to provide its subscribers and the PCS Partnership's subscribers with
the ability to roam seamlessly throughout the Company's Louisiana Cluster and
the PCS Partnership's markets as soon as technically feasible at a reasonable
cost. Each of these BTA markets is presently in the design and engineering
stage. The PCS Partnership has retained the Company to manage the design,
construction and daily operations of the Lafayette, Beaumont and Lufkin BTAs,
for which the Company is paid a monthly management fee and is reimbursed for its
expenses. The Company has invested $2.9 million in the PCS Partnership and has
committed to contribute up to an additional $10.1 million. The PCS Partnership
bid $61.2 million for its licenses, which is payable over 10 years, and
currently estimates that capital expenditures of at least an additional $69.0
million will be required over the next 10 years to build out its PCS markets.
The PCS Partnership has obtained a commitment from the Rural Telephone Finance
Cooperative for $59.0 million of financing for capital expenditures under which
the Company would be required to guarantee repayment of up to $6.2 million.
There can be no assurance that the build-out of the PCS markets will not cost
materially more than is currently anticipated or that additional financing, if
required, will be available at all or in the absence of additional guarantees by
the Company and other partners.
The FCC's D, E and F-block auctions ended on January 14, 1997. Mobility was
the high bidder for 22 broadband PCS licenses covering 4.9 million Pops in 22
BTAs. These PCS markets expand and complement the Company's wireless network.
Mobility bid $9.5 million for these licenses, of which $2.8 million will be paid
as a down payment and the remaining $6.7 million will be financed by the federal
government over ten years. The Company and the other 50% owner of Mobility have
each invested $2.0 million in Mobility. This $4.0 million will be used to fund
the down payment on the license cost and for working capital purposes. There can
be no assurance that the licenses will be granted. Additional financing will be
required to build out these PCS markets; however, there can be no assurance that
Mobility will be able to obtain such financing, or that such financing, if
obtained, will not require guarantees or additional capital contributions by the
Company.
PCS is a new generation of wireless communications, offering customers
advanced, secure, two-way digital wireless services and applications. Services
that permit sophisticated call management, enhanced two-way messaging and,
eventually, high-speed data and video transmission, will enable customers to
better manage personal and business needs. The Company believes that the
introduction of PCS into the wireless market will stimulate demand for wireless
communications services, attract customers who are not currently subscribers to
wireless service and increase usage by current wireless customers. PCS will
compete with existing cellular telephone service and may provide features not
currently offered by cellular providers.
6
<PAGE> 9
THE OFFERING
<TABLE>
<S> <C>
Class A Common Stock offered(1)....................... 1,700,000 shares
Common Stock to be outstanding after this Offering:
Class A Common Stock(1)(2).......................... 1,700,000 shares
Class B Common Stock................................ 11,250,000 shares
-----------------
Total(1)(2)................................. 12,950,000 shares
=================
</TABLE>
- ---------------
(1) Assumes no exercise of the Underwriters' over-allotment option.
(2) Does not include outstanding options to purchase an aggregate of up to
approximately 270,000 shares of Class A Common Stock pursuant to the
Company's 1997 Stock Option Plan.
---------------------
Use of Proceeds............... The Company intends to use approximately $11.6
million of the net proceeds to acquire the
remaining 49% of the capital stock of the
Company's subsidiary that owns the cellular
licenses covering the Mississippi-3 and
Mississippi-4 RSAs. The remainder of the net
proceeds will be used for acquisitions of
additional wireless Systems, the expansion of
existing cellular Systems and for general
corporate purposes. Pending such uses, the
proceeds will be applied to reduce existing
bank debt. See "Use of Proceeds" and
"Capitalization."
Voting Rights................. Holders of Class A Common Stock are entitled to
one vote per share while holders of Class B
Common Stock are entitled to 10 votes per
share. The Class A Common Stock and Class B
Common Stock will vote together as one class on
all matters submitted to a vote of shareholders
generally, including the election of directors.
Immediately following the consummation of this
Offering, the outstanding shares of Class A
Common Stock will represent approximately 1.5%
of the combined voting power of the outstanding
Common Stock (1.7% if the Underwriters' over-
allotment option is exercised in full). The
Company's existing shareholders will own shares
of Class B Common Stock representing in the
aggregate approximately 98.5% of the combined
voting power of the Common Stock (98.3% if the
Underwriters' over-allotment option is
exercised in full) and thereby will continue to
be able to control the election of the
Company's Board of Directors and generally will
be able to direct the affairs of the Company.
See "Principal Shareholders" and "Description
of Capital Stock."
Dividends on Common Stock..... Holders of Class A Common Stock and Class B
Common Stock will be entitled to share ratably,
as if a single class, in any dividends declared
by the Company on the Common Stock. The Company
does not anticipate paying dividends on its
Common Stock in the foreseeable future. See
"Dividend Policy" and "Description of Capital
Stock."
Conversion of Class B Common
Stock....................... Shares of Class B Common Stock are convertible
into Class A Common Stock on a share-for-share
basis subject to certain procedures and
restrictions. See "Description of Capital
Stock."
NASDAQ National Market
Symbol........................ UNWR
7
<PAGE> 10
SUMMARY FINANCIAL AND CERTAIN OPERATING DATA
(IN THOUSANDS, EXCEPT PER SHARE AND OPERATING DATA)
<TABLE>
<CAPTION>
HISTORICAL
---------------------------------------------------- PRO FORMA COMBINED AS ADJUSTED(1)
YEAR ENDED -----------------------------------
DECEMBER 31, NINE MONTHS YEAR ENDED NINE MONTHS
----------------------------- ENDED DECEMBER 31, ENDED
1993 1994 1995 SEPTEMBER 30, 1996 1995 SEPTEMBER 30, 1996
------- ------- ------- ------------------ ------------ ------------------
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Total revenues.............. $14,346 $22,553 $39,252 $ 43,858 $ 49,868 $ 48,401
Cost of service............. 4,513 7,445 11,430 11,622 14,121 12,653
Merchandise cost of sales... 720 2,518 3,373 3,377 4,418 3,709
General and administrative
expense................... 1,692 2,498 5,308 7,078 7,653 7,870
Sales and marketing
expense................... 2,736 3,768 6,262 5,448 6,887 5,652
Depreciation and
amortization.............. 2,037 2,892 5,686 6,432 10,057 8,285
Operating income............ 2,648 3,432 7,193 9,901 6,732 10,232
Interest income (expense),
net....................... 93 (630) (3,065) (4,302) (7,481) (5,721)
Income tax expense.......... 1,317 1,914 2,291 2,375 362 1,928
Net income (loss)........... 1,909 1,750 2,603 3,751 (799) 2,807
Net income (loss) per
share..................... $ 0.17 $ 0.16 $ 0.23 $ 0.33 $ (0.06) $ 0.22
OTHER FINANCIAL DATA:
EBITDA(2)................... $ 4,685 $ 6,324 $12,879 $ 16,333 $ 16,789 $ 18,517
Net cash provided by
operating activities...... 7,537 1,564 6,737 8,938
Net cash used in investing
activities................ (17,244) (5,184) (45,109) (48,952)
Net cash provided by
financing activities...... 6,540 5,803 38,149 43,280
</TABLE>
<TABLE>
<CAPTION>
HISTORICAL AS ADJUSTED(1)
AS OF AS OF
SEPTEMBER 30, 1996 SEPTEMBER 30, 1996
------------------ ------------------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Working capital............. $ 3,035 $ 3,035
Property and equipment,
net....................... 26,407 26,407
Cellular licenses, net...... 76,355 87,938
Total assets................ 130,933 142,461
Long-term debt.............. 87,682 80,793
Total liabilities and
minority interest......... 105,598 98,569
Shareholders' equity........ 25,335 43,892
</TABLE>
<TABLE>
<CAPTION>
HISTORICAL
----------------------------------------------------
YEAR ENDED
DECEMBER 31, NINE MONTHS
----------------------------- ENDED
1993 1994 1995 SEPTEMBER 30, 1996
------- ------- ------- ------------------
<S> <C> <C> <C> <C>
SELECTED OPERATING DATA:
Ending subscribers.......... 15,942 27,313 55,576 76,907
Penetration(3).............. 1.9% 3.3% 4.9% 5.4%
Churn(4).................... 1.2% 1.1% 1.4% 1.7%
Subscriber revenue per
average subscriber(5)..... $ 61 $ 56 $ 58 $ 55
Selling & marketing costs
(all in) per net
additional
subscriber(6)............. $ 414 $ 465 $ 473 $ 599
</TABLE>
- ---------------
(1) The unaudited pro forma statement of operations data and EBITDA for the year
ended December 31, 1995 and the nine months ended September 30, 1996 include
the historical operations of the Company and give effect to the following as
if they occurred as of January 1, 1995: (i) the acquisition of the Kansas
Cluster, (ii) the acquisition of the Alabama-3 RSA, (iii) the acquisition of
the Alabama-4 RSA, (iv) this Offering and the application of the net
proceeds therefrom, including the acquisition of MS 34. The balance sheet
data as adjusted as of September 30, 1996 includes the historical accounts
of the Company and gives effect to the following as if they occurred as of
September 30, 1996: (i) this Offering and (ii) the application of the net
proceeds therefrom, including the acquisition of MS 34.
(2) EBITDA represents operating income before depreciation and amortization.
EBITDA is a measure commonly used in the telecommunications industry and is
presented to enhance the understanding of the Company's operating results
and is not intended to be a financial performance measure comparable to
similarly titled measures of other companies. EBITDA should not be regarded
as an alternative to either operating income or net income as an indicator
of operating performance, or to cash flows as a measure of liquidity.
Furthermore, EBITDA is not a GAAP-based financial measure, and it should not
be considered as an alternative to GAAP-based measures of financial
performance. See "Selected Financial Data" and the Consolidated Financial
Statements included elsewhere herein.
(3) Represents the ratio of ending subscribers to total Pops.
(4) Represents the average of the monthly churn rates during the periods
presented. Churn equals the ratio of disconnected monthly subscribers to
weighted average monthly subscribers.
(5) Includes cellular service subscriber revenue divided by average subscribers
for the period divided by the number of months in the period presented.
(6) Includes selling and marketing expense and equipment subsidy (merchandise
cost of sales net of merchandise sales) divided by net subscribers added
through normal operating activities (excludes subscribers added through
acquisitions).
8
<PAGE> 11
RISK FACTORS
In addition to the other matters described in this Prospectus, each
prospective purchaser of the Class A Common Stock offered hereby should consider
the specific risk factors set forth below.
GROWTH BY ACQUISITIONS
The Company's growth strategy relies in part upon the acquisition and
development of additional wireless communications Systems. There can be no
assurance, however, that suitable acquisitions will be available to the Company,
that the Company will be able to obtain additional financing for any such
acquisitions, if required, or that the Company will be able to compete
effectively for these Systems against other potential purchasers, most of which
are larger and have greater financial resources than the Company. In addition,
the Company will be subject to risks that its existing and new Systems will not
perform as expected and that the returns from such Systems will not justify the
consideration paid or to be paid for them or the capital expenditures needed to
develop them.
COMPETITION
Competition for subscribers among wireless licensees is based principally
upon the services and enhancements offered, the technical quality of the System,
customer service, System coverage, capacity and price. There are currently two
cellular providers, and there will be up to six PCS providers in each market.
The Company believes that PCS service will in most respects appear essentially
the same to the user as cellular service. Consequently, the Company believes
that the primary competitive impact of PCS service on cellular operators will be
the addition of up to six additional competitors in each cellular market, in
which cellular operators previously had only one competitor. In the future, the
Company may face increased competition from entities providing similar services
using other communications technologies and services. The Company also competes
with paging and dispatch service providers, resellers and, to a lesser extent,
landline telephone service providers. Competition is expected to be intense. New
technologies may evolve that compete with the Company's products and services. A
number of the Company's competitors have substantially greater resources than
the Company. Several of the Company's competitors are operating or planning to
operate, through joint ventures and affiliation arrangements, wireless
communications systems that encompass most of the continental United States. See
"Business -- Competition."
SERVICE MARKS
The Company uses the CELLULARONE(R) service mark in all of its cellular
markets except the Louisiana Cluster. AT&T Wireless, which had been the single
largest user of the CELLULARONE(R) mark, has reduced its use of the mark. If for
some reason the name CELLULARONE(R) were to suffer diminished marketing appeal,
the Company's ability both to attract new subscribers and retain existing
subscribers could be materially impaired. In such circumstances or otherwise,
the Company may be required to develop a new service mark. Competitors of the
Company possess, and others may develop over time, branding with significantly
greater name recognition than that of the Company. A failure by the Company to
maintain existing rights to its current cellular branding or to develop suitable
alternatives thereto would have a material adverse effect on the Company's
ability to market its products and services and could require the Company to
invest significant additional funds to develop such alternatives. See
"Business -- Trade Name; Service Mark."
GOVERNMENTAL REGULATION
The licensing, construction, operation, acquisition and sale of cellular
and PCS Systems, as well as the number of cellular, PCS and other wireless
licensees permitted in each market, are regulated by the FCC. Changes in the
regulation of such activities, such as a decision by the FCC to issue new
licenses or permit more than two licenses in each market for cellular
communications services or more than six licenses for PCS services, could have a
material adverse effect on the Company's operations. In addition, all cellular
and PCS licenses in the United States are granted for an initial 10-year term,
are subject to renewal and may be revoked by the FCC at any time for cause. The
Company believes that each of its cellular licenses would, if currently
9
<PAGE> 12
up for renewal, be renewed based upon FCC rules establishing a presumption in
favor of licensees that have provided "substantial" service during the past
license term and have substantially complied with their regulatory obligations
during the initial license period, but there can be no assurance that all of the
Company's licenses will be renewed. The wireless communications industry is also
subject to certain state and local governmental regulation. Operating costs are
affected by these and other governmental actions that are beyond the Company's
control. See "Business -- Governmental Regulation."
CERTAIN PCS RISKS
PCS Systems have no significant operating history in the United States and
there can be no assurance that these Systems will become profitable. There are
numerous significant risks associated with the PCS business in general and the
businesses of the PCS Partnership, in which the Company has a 24 1/3% interest,
and of Mobility, in which the Company has a 50% interest, in particular. First,
PCS operators are free to choose from among several competing digital signal
transmission technologies, or standards, that are not interoperable. At present,
none of these competing technologies has emerged as dominant among PCS Systems.
The PCS Partnership has recently chosen to use one of these technologies, CDMA,
in its PCS Systems. There can be no assurance that CDMA will become the, or even
a, dominant technology in the United States. See "The PCS Industry -- Operation
of PCS Systems." If CDMA does not become the dominant standard or is not able to
compete successfully with other PCS technologies, the PCS Partnership could be
deprived of revenues from PCS customers who roam into the PCS Partnership's
markets and could lose PCS customers who become dissatisfied because they are
unable to roam outside the PCS Partnership's markets. Significant customer loss
and loss of roaming revenues could have a material adverse effect on the PCS
Partnership's results of operations and liquidity. Second, successful build-out
of a PCS System in each of the PCS Partnership's BTAs is subject to completion
of the network design; acquisition of appropriate sites for base station
equipment, which may require zoning variances and local regulatory approval; the
purchase and the installation of the network equipment, which are susceptible to
unpredictable supply or construction delays; and satisfactory accommodation of
microwave users currently using the spectrum. Third, the PCS Partnership may
ultimately be unable to finance the build-out and operation of its PCS Systems
without additional guarantees of financing from its partners, including the
Company, whose risk from the PCS Partnership could thereby be significantly
increased. The PCS Partnership has obtained a commitment for $59.0 million of
financing, of which the Company would be required to guarantee repayment of up
to $6.2 million. See "Business -- PCS Operations," "-- Organization" and
"-- Regulation -- Licensing of PCS Systems." In addition, there can be no
assurance that the licenses for which Mobility was recently the high bidder will
be granted by the FCC or, if granted, that the grants will not be withdrawn upon
reconsideration by the FCC or upon review by a court of competent jurisdiction.
There can also be no assurance that Mobility will be able to obtain financing
for the build-out and operation of its PCS Systems, or that such financing, if
obtained, will not require guarantees or additional capital contributions by the
Company. Mobility has not selected a digital signal transmission technology.
RADIO FREQUENCY EMISSION CONCERNS; MEDICAL DEVICE INTERFERENCE
Media reports have suggested that certain radio frequency ("RF") emissions
from wireless handsets may be linked to various health concerns, including
cancer, and may interfere with various electronic medical devices, including
hearing aids and pacemakers. Concerns over RF emissions may have the effect of
discouraging the use of wireless handsets, which could have an adverse effect
upon the Company's business. The FCC has a rulemaking proceeding pending to
update the guidelines and methods it uses for evaluating RF emissions from radio
equipment, including wireless handsets. While the proposal would impose more
restrictive standards on RF emissions from lower power devices such as wireless
handsets, it is believed that all wireless handsets currently marketed by the
Company and in use by the Company's subscribers already comply with the proposed
standards.
EQUIPMENT FAILURE; NATURAL DISASTER
The Company's Systems include nine mobile telephone switching offices,
which are the point of connection between a wireless System and the local
landline telephone company, and approximately 93 cell
10
<PAGE> 13
sites, which are the base stations from which the cellular signal is transmitted
to and from the user's handset. The Company does not carry "business
interruption" insurance, and major equipment failure or a natural disaster
affecting these switching offices or sites could have a material adverse effect
on the Company's operations.
CONTROL BY EXISTING SHAREHOLDERS; ANTI-TAKEOVER EFFECT OF DUAL CLASSES OF COMMON
STOCK
Holders of Class A Common Stock are entitled to one vote per share, while
holders of Class B Common Stock are entitled to 10 votes per share. Class B
Common Stock will not trade in the public market, and applicable transfer
restrictions prevent Class B Common Stock from being acquired by persons other
than those who held Class B Common Stock of the Company immediately prior to
this Offering, their affiliates and certain other "qualified holders." See
"Shares Eligible for Future Sale." Immediately following the consummation of
this Offering, the outstanding shares of Class A Common Stock will represent
approximately 1.5% of the combined voting power of the outstanding Common Stock
(1.7% if the Underwriters' over-allotment option is exercised in full). The
Company's existing shareholders, who will hold Class B shares, will continue to
be able to control the election of the Company's Board of Directors and
generally will be able to direct the affairs of the Company. Such control will
allow those persons to determine whether the Company should enter into
transactions involving an actual or potential change of control of the Company,
including transactions in which the holders of Class A Common Stock might
receive a premium for their shares over the then-prevailing market price, and
such control may therefore have a depressive effect on the market price for
Class A Common Stock.
NO PRIOR MARKET; POSSIBLE VOLATILITY OF STOCK PRICE
There has been no public market for the shares of the Company prior to this
Offering, and there is no assurance that a significant public market for the
Class A Common Stock will develop or be sustained after this Offering. The
initial public offering price of the Class A Common Stock will be determined by
negotiations between the Company and the representatives of the Underwriters.
See "Underwriting." The market price of the Class A Common Stock may be
extremely volatile. Factors such as fluctuations in the valuation of wireless
licenses, results of current and future FCC auctions, acquisitions by the
Company, significant announcements by the Company and its competitors, quarterly
fluctuations in the Company's operating results and general conditions in the
communications market may have a significant impact on the market price of the
Class A Common Stock. In addition, in recent years the stock market has
experienced extreme price and volume fluctuations. These fluctuations have had a
substantial effect on the market prices for many high technology and
communications companies, often unrelated to the operating performance of the
specific companies.
SHARES ELIGIBLE FOR FUTURE SALE
Sales of substantial amounts of Class A Common Stock in the public market
after this Offering could adversely affect prevailing market prices. The Company
has agreed that, for a period of 180 days after the date of this Prospectus, it
will not sell additional shares of Common Stock or securities convertible into,
exercisable for, or exchangeable for, Common Stock without the prior consent of
the Underwriters. The Company's Articles of Incorporation provide that, subject
to certain limitations, Class B Common Stock may be converted into Class A
Common Stock. Sales of certain shares of Class B Common Stock are subject to
certain restrictions set forth in the Company's Articles of Incorporation and
pursuant to Rule 144 under the Securities Act. See "Shares Eligible for Future
Sale."
DILUTION
Purchasers of the Class A Common Stock offered hereby will suffer immediate
dilution of $15.50 in the net tangible book value per share of the Class A
Common Stock from the initial public offering price. See "Dilution."
11
<PAGE> 14
BENEFITS OF THE OFFERING TO CURRENT SHAREHOLDERS
Prior to this Offering, the shares of common stock held by the Company's
current shareholders were reclassified into Class B Common Stock. See
"Description of Capital Stock" and "Shares Eligible for Future Sale." Such
shareholders will benefit from this Offering to the extent that a public market
for the Company's Common Stock is thereby created. Upon completion of this
Offering, based upon the difference between their acquisition cost of the
Company's Common Stock prior to reclassification and the value of such stock
based on the public offering price and assuming conversion to Class A Common
Stock, the current shareholders will enjoy an aggregate unrealized gain of
approximately $133.5 million in their shares. None of such shares are included
in this Offering.
ABSENCE OF DIVIDENDS
The Company does not anticipate paying any dividends on its Common Stock in
the foreseeable future. See "Dividend Policy."
SEASONALITY
The Company, like the wireless communications industry in general, has
historically experienced significant subscriber growth during the fourth
calendar quarter. Accordingly, during such quarter the Company experiences
greater losses on merchandise sales and increases in sales and marketing
expenses. The Company has historically experienced highest usage and revenue per
subscriber during the summer months. The Company expects these trends to
continue.
CAUTIONARY STATEMENT REGARDING RISKS AND UNCERTAINTIES
THAT MAY AFFECT FUTURE RESULTS
This Prospectus contains forward-looking statements about the business,
financial condition and prospects of the Company. The actual results of the
Company could differ materially from those indicated by the forward-looking
statements because of various risks and uncertainties, including without
limitation changes in technology, customer demand, the availability of products,
changes in competition, the ability of the Company to expand its markets through
acquisitions in accordance with its plans, economic conditions, interest rate
fluctuations, dependence on manufacturers' product development, various risks
due to changes in products or technology, changes in FCC, tax and other
governmental rules and regulations applicable to the Company, and other risks
that are identified above. These risks and uncertainties are beyond the ability
of the Company to control, and in many cases the Company cannot predict the
risks and uncertainties that could cause its actual results to differ materially
from those indicated by the forward-looking statements. When used in this
Prospectus, the words "believes," "estimates," "plans," "expects," and
"anticipates" and similar expressions as they relate to the Company or its
management are intended to identify forward-looking statements.
USE OF PROCEEDS
The net proceeds to be received by the Company from the sale of the Class A
Common Stock offered hereby (after deducting underwriting discounts and
commissions and estimated offering expenses) are estimated to be approximately
$18.5 million ($21.3 million if the Underwriters' over-allotment option is
exercised in full). The Company intends to use approximately $11.6 million of
the net proceeds of this Offering to acquire 49% of the capital stock of MS 34,
a Mississippi corporation which owns the cellular licenses covering the
Company's Mississippi-3 and Mississippi-4 RSAs. The Company presently owns 51%
of the capital stock of MS 34. The remainder of the net proceeds will be used
for acquisitions of additional Systems, the expansion of existing cellular
Systems and for general corporate purposes. Pending such uses, the proceeds will
be applied to reduce existing bank debt. The Company's long-term borrowings from
1994 through September 30, 1996 were made through various credit facilities
bearing various rates of interest at both fixed and variable terms ranging from
5.45% to 10.50%, with maturity dates ranging from December 20, 2002 to December
20, 2003. See Note 7 to the Consolidated Financial Statements of the Company
included elsewhere herein.
12
<PAGE> 15
DIVIDEND POLICY
The Company anticipates that any income generated in the foreseeable future
will be retained for the development and expansion of its business and the
repayment of indebtedness, and therefore the Company does not anticipate paying
dividends on its Common Stock in the foreseeable future. The payment of
dividends is restricted under the Company's long-term debt agreements.
DILUTION
The net tangible book deficit of the Company as of September 30, 1996, was
$52.4 million. Without taking into account any changes in such net tangible book
deficit after September 30, 1996, other than to give effect to the receipt of
net proceeds from the sale of the 1,700,000 shares of Class A Common Stock
offered at an assumed initial public offering price of $12.00 per share
(assuming the Underwriters' over-allotment option is not exercised), the net
tangible book deficit of the Company as adjusted for this Offering, would have
been $(3.50) per share, representing an immediate dilution to new investors of
$15.50 per share and an immediate increase of $1.16 per share to existing
shareholders. The following table illustrates the per share dilution:
<TABLE>
<S> <C> <C>
Assumed initial public offering price(1)........................... $12.00
------
Net tangible book deficit(2)..................................... $(4.66)
------
Decrease in net tangible book deficit per share attributable to
payments by new investors..................................... 1.16
------
Net tangible book deficit per share as adjusted for this
Offering(2)...................................................... (3.50)
------
Dilution per share to new investors(3)............................. $15.50
======
</TABLE>
- ---------------
(1) Before deducting the underwriting discounts and commissions and offering
expenses to be paid by the Company.
(2) "Net tangible book deficit per share" represents the amount of total assets
less total liabilities, excluding intangibles of $77.7 million before this
Offering and $89.2 million after this Offering, consisting primarily of
cellular licenses and deferred financing costs, divided by the number of
shares of Common Stock outstanding of 11,250,000 before this Offering and
12,950,000 after this Offering.
(3) Dilution is the difference between the amount of cash paid by new investors
for a share of Class A Common Stock and net tangible book deficit per share
as adjusted for this Offering.
The foregoing table assumes no exercise of outstanding stock options. As of
the date of this Prospectus, there are outstanding stock options to purchase up
to approximately 270,000 shares of Class A Common Stock at an exercise price of
approximately $12.00 per share. If all such options had been outstanding and
exercised at September 30, 1996, the consolidated net tangible book deficit per
share of Common Stock as of such date would have been $(4.27) and the
consolidated net tangible book deficit per share after this Offering would have
been $(3.19), representing an immediate dilution to new investors of $15.19 per
share and an immediate increase of $1.08 per share to existing shareholders.
The following table sets forth on a pro forma basis as of September 30,
1996, the number of shares of Common Stock purchased from the Company and the
total consideration paid and the average price per share paid by the existing
shareholders of the Company and by new investors purchasing shares in this
Offering, before deducting the underwriting discounts and commissions and
offering expenses.
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
----------------------- --------------------- PRICE PER
NUMBER PERCENT(1) AMOUNT PERCENT SHARE
---------- ---------- ----------- ------- ---------
<S> <C> <C> <C> <C> <C>
Existing shareholders(2)........... 11,250,000 86.9% $ -- --% $ --
New investors...................... 1,700,000 13.1 20,400,000 100.0 12.00
---------- ----- ----------- -----
Total.................... 12,950,000 100.0% $20,400,000 100.0%
========== ===== =========== =====
</TABLE>
- ---------------
(1) Percentage of total shares of Common Stock to be outstanding after this
Offering.
(2) The Common Stock held by existing shareholders has been issued over time
and, for purposes of this comparison, is assumed to have been issued for
nominal consideration.
13
<PAGE> 16
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Company as of September 30, 1996, and the consolidated capitalization as
adjusted for this Offering. This table should be read in conjunction with the
financial statements appearing elsewhere in this Prospectus, including the notes
thereto, the "Unaudited Pro Forma Condensed Combined Financial Data" and notes
thereto and "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
<TABLE>
<CAPTION>
ACTUAL AS ADJUSTED
-------- -----------
<S> <C> <C>
Current portion of long-term debt....................................... $ 7,996 $ 7,996
======== =========
Long-term debt.......................................................... 87,682 80,793(1)
Shareholders' equity:
Preferred Stock, no par value, 40,000,000 shares authorized and no
shares issued and outstanding actual and as adjusted............... -- --
Class A Common Stock, $.01 par value per share, 100,000,000 shares
authorized and no shares issued and outstanding actual, 1,700,000
shares outstanding as adjusted..................................... -- 17
Class B Common Stock, $.01 par value per share, 60,000,000 shares
authorized and 11,250,000 shares issued and outstanding actual and
as adjusted........................................................ 112 112
Additional paid-in capital............................................ 1,835 20,290
Retained earnings..................................................... 23,388 23,473
-------- ---------
Total shareholders' equity.................................... 25,335 43,892
-------- ---------
Total capitalization.......................................... $113,017 $ 124,685
======== =========
</TABLE>
- ---------------
(1) This figure assumes that proceeds from this Offering are used exclusively to
acquire 49% of the capital stock of MS 34 and to reduce existing bank debt.
However, in the ordinary course of its business, the Company analyzes
opportunities to expand its existing cellular Systems and to acquire
additional Systems. The amount of proceeds available to reduce existing bank
debt may be diminished to the extent that proceeds from this Offering are
applied to such purposes. See "Use of Proceeds."
14
<PAGE> 17
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA
The following unaudited pro forma condensed combined statements of
operations of the Company for the year ended December 31, 1995 and the nine
months ended September 30, 1996 give effect to the following transactions as if
they occurred as of January 1, 1995: (i) the acquisition of the assets of
Miscellco Communications, Inc., which includes the System serving the Kansas
Cluster (Kansas-1, 2, 6, 7, 11, 12, 13 RSAs and Oklahoma-1 RSA) on April 30,
1995; (ii) the acquisition of the assets of West Alabama Cellular Telephone
Company, Inc., which includes the System serving Alabama-3 RSA on May 15, 1996;
(iii) the acquisition of the Alabama-4 RSA on July 1, 1996, and (iv) the sale by
the Company of the Class A Common Stock offered hereby (assuming no exercise of
the Underwriters' over-allotment option) and the application of the net proceeds
therefrom to acquire the remaining 49% of the common stock of MS 34, which
includes the System serving the Mississippi-3 and Mississippi-4 RSAs, and to
repay a portion of existing debt. The following condensed balance sheet as
adjusted as of September 30, 1996 gives effect to (iv) noted above as if such
transactions had occurred on September 30, 1996. The unaudited pro forma
condensed combined financial statements give effect to the aforementioned
acquisitions under the purchase method of accounting and the assumptions in the
accompanying notes to the pro forma condensed combined financial statements. The
historical financial statements relating to the Kansas and Alabama Clusters
include the financial position and results of operations of the Systems through
the date of acquisition by the Company. Results of operations of the acquired
companies for periods subsequent to the respective acquisition dates are
included in the historical results of operations of the Company.
The following unaudited pro forma condensed combined financial information
has been prepared by the Company's management based in part on information
provided with respect to historical financial statements of the Systems included
elsewhere in this Prospectus. The unaudited pro forma data is not designed to
represent and does not represent what the Company's financial position or
results of operations actually would have been had the aforementioned
transactions been completed as of the date or the beginning of the periods
indicated, or to project the Company's financial position or results of
operations at any future date or for any future period. The pro forma condensed
combined financial statements should be read in conjunction with the financial
statements and notes of the Company contained elsewhere herein.
15
<PAGE> 18
US UNWIRED INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
HISTORICAL
-------------------------------------------- PRO FORMA
WEST PRO FORMA PRO FORMA OFFERING COMBINED
US UNWIRED MISCELLCO ALABAMA ALABAMA 4 ADJUSTMENTS COMBINED ADJUSTMENTS AS ADJUSTED
---------- --------- ------- --------- ----------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues.......................$ 39,252 $ 2,356 $3,366 $ 4,894 $ -- $49,868 $ -- $ 49,868
Costs and expenses:
Costs of service............. 11,430 416 854 1,421 -- 14,121 -- 14,121
Merchandise cost of sales.... 3,373 357 337 351 -- 4,418 -- 4,418
General and
administrative............. 5,308 550 1,129 666 -- 7,653 -- 7,653
Sales and marketing.......... 6,262 366 73 186 -- 6,887 -- 6,887
Depreciation and
amortization............... 5,686 250 252 455 2,835(a) 9,478 579(e) 10,057
---------- ------- ------ ------- ------- ------- --------- ----------
32,059 1,939 2,645 3,079 2,835 42,557 579 43,136
---------- ------- ------ ------- ------- ------- --------- ----------
Operating income............... 7,193 417 721 1,815 (2,835) 7,311 (579) 6,732
Other income (expense):
Interest expense, net........ (3,065) (317) (170) (460) (4,068)(b) (8,080) 599(d) (7,481)
Gain (loss) on sale of
assets..................... (32) -- -- -- -- (32) -- (32)
---------- ------- ------ ------- ------- ------- --------- ----------
Total other income (expense)... (3,097) (317) (170) (460) (4,068) (8,112) 599 (7,513)
---------- ------- ------ ------- ------- ------- --------- ----------
Income (loss) before income
taxes, minority interest and
equity in income of
affiliates................... 4,096 100 551 1,355 (6,903) (801) 20 (781)
---------- ------- ------ ------- ------- ------- --------- ----------
Income tax expense (benefit)... 2,291 -- -- 438 (2,375)(c) 354 8(f) 362
---------- ------- ------ ------- ------- ------- --------- ----------
Income (loss) before minority
interest and equity in income
of affiliates................ 1,805 100 551 917 (4,528) (1,155) 12 (1,143)
---------- ------- ------ ------- ------- ------- --------- ----------
Minority interest in losses of
subsidiary................... 454 -- -- -- -- 454 (454)(e) --
Equity in income of
affiliates................... 344 -- -- -- -- 344 -- 344
---------- ------- ------ ------- ------- ------- --------- ----------
Net income (loss) applicable to
common shareholders..........$ 2,603 $ 100 $ 551 $ 917 $(4,528) $ (357) $ (442) $ (799)
========== ======= ====== ======= ======= ======= ========= ==========
Net income (loss) per common
share........................$ 0.23 $ (0.06)
========== ==========
Weighted average number of
shares outstanding...........11,242,334 1,700,000 12,942,334
========== ========= ==========
</TABLE>
16
<PAGE> 19
US UNWIRED INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
HISTORICAL
---------------------------------- PRO FORMA
WEST PRO FORMA PRO FORMA OFFERING COMBINED AS
US UNWIRED ALABAMA ALABAMA 4 ADJUSTMENTS COMBINED ADJUSTMENTS ADJUSTED
---------- ------- --------- ----------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues............................ $ 43,858 $1,641 $ 2,902 $ -- $48,401 $ -- $ 48,401
Costs and expenses:
Costs of service.................. 11,622 339 692 -- 12,653 -- 12,653
Merchandise costs of sales........ 3,377 155 177 -- 3,709 -- 3,709
General and administrative........ 7,078 529 263 -- 7,870 -- 7,870
Sales and marketing............... 5,448 37 167 -- 5,652 -- 5,652
Depreciation and amortization..... 6,432 102 563 754(a) 7,851 434(e) 8,285
---------- ------ ------ ------- ------- --------- ----------
33,957 1,162 1,862 754 37,735 434 38,169
---------- ------ ------ ------- ------- --------- ----------
Operating income.................... 9,901 479 1,040 (754) 10,666 (434) 10,232
Other income (expense):
Interest expense, net............. (4,302) (61) -- (1,808)(b) (6,171) 450(d) (5,721)
---------- ------ ------ ------- ------- --------- ----------
Total other income (expense)........ (4,302) (61) -- (1,808) (6,171) 450 (5,721)
---------- ------ ------ ------- ------- --------- ----------
Income (loss) before income taxes,
minority interest and equity in
income of affiliates.............. 5,599 418 1,040 (2,562) 4,495 16 4,511
---------- ------ ------ ------- ------- --------- ----------
Income tax expense (benefit)........ 2,375 -- 362 (815)(c) 1,922 6(f) 1,928
---------- ------ ------ ------- ------- --------- ----------
Income (loss) before minority
interest and equity in income of
affiliates........................ 3,224 418 678 (1,747) 2,573 10 2,583
---------- ------ ------ ------- ------- --------- ----------
Minority interest in losses of
subsidiary........................ 303 -- -- -- 303 (303)(e) --
Equity in income of affiliates...... 224 -- -- -- 224 -- 224
---------- ------ ------ ------- ------- --------- ----------
Net income applicable to common
shareholders...................... $ 3,751 $ 418 $ 678 $(1,747) $ 3,100 $ (293) $ 2,807
========== ====== ====== ======= ======= ========= ==========
Net income per common share......... $ 0.33 $ 0.22
========== ==========
Weighted average number of shares
outstanding....................... 11,250,000 1,700,000 12,950,000
========== ========= ==========
</TABLE>
17
<PAGE> 20
US UNWIRED INC.
UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
AS OF SEPTEMBER 30, 1996
(IN THOUSANDS)
ASSETS
<TABLE>
<CAPTION>
HISTORICAL OFFERING
US UNWIRED ADJUSTMENTS AS ADJUSTED
---------- ----------- -----------
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents....................... $ 10,102 $ -- $ 10,102
Subscriber receivables, net..................... 7,977 -- 7,977
Other receivables............................... 694 -- 694
Inventory....................................... 1,683 -- 1,683
Prepaid expenses................................ 355 -- 355
-------- --------- ---------
Total current assets......................... 20,811(i) -- 20,811
Investments in unconsolidated affiliates.......... 5,426 -- 5,426
Property and equipment, net....................... 26,407(i) -- 26,407
Cellular licenses, net............................ 76,355(i) 11,583(g) 87,938
Deferred income taxes............................. 579 -- 579
Other assets...................................... 1,355 (55)(h) 1,300
-------- --------- ---------
Total assets................................. $130,933 $ 11,528 $ 142,461
======== ========= =========
LIABILITIES & SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses........... $ 9,780 $ -- $ 9,780
Current maturities of long-term debt............ 7,996 7,996
-------- --------- ---------
Total current liabilities.................... 17,776(i) 17,776
Long-term debt.................................... 87,682 (6,889)(g) 80,793
Minority interest................................. 140 (140)(h) --
Shareholders' equity.............................. 25,335 18,557(g)(h) 43,892
-------- --------- ---------
Total liabilities and shareholders' equity... $130,933 $ 11,528 $ 142,461
======== ========= =========
</TABLE>
18
<PAGE> 21
NOTES TO UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL STATEMENTS
(IN THOUSANDS)
For purposes of determining the pro forma effect of the transactions
described in the previous pages on the Company's Unaudited Pro Forma Condensed
Combined Statements of Operations for the year ended December 31, 1995 and the
nine months ended September 30, 1996, the following adjustments have been made:
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED SEPTEMBER 30,
DECEMBER 31, 1995 1996
----------------- -----------------
<S> <C> <C>
(a) Represents incremental amortization and depreciation due
to the application of purchase accounting, which
increased the basis of intangible assets, primarily
license costs. Intangible assets are amortized on a
straight line basis over 20 years. Property and
equipment, which consists primarily of cell site
equipment, is depreciated on a straight line basis over
five years.
Elimination of historical amortization and
depreciation......................................... $ (957) $ (665)
Amortization of cellular licenses....................... 2,454 927
Depreciation of cell site equipment..................... 1,338 492
------- -------
$ 2,835 $ 754
======= =======
(b) Represents the net effect on interest expense resulting
from (i) additional borrowings required to finance the
acquisition of the Kansas and Alabama Clusters under
bank credit facilities with a weighted average interest
rate of 8.7% per annum and (ii) interest on debt not
assumed in connection with such acquisitions.
Interest expense related to borrowings under bank
credit facilities.................................... $ 5,015 $ 1,869
Elimination of historical interest expense on debt not
assumed.............................................. (947) (61)
------- -------
$ 4,068 $ 1,808
======= =======
(c) Represents income tax benefit calculated using statutory
income tax rates applicable to the pro forma adjustments
and to record income tax on acquired companies where no
prior income taxes were provided........................ $(2,375) $ (815)
======= =======
(d) Represents the elimination of interest expense as a
result of the application of proceeds from this Offering
to repay a portion of the debt incurred in the
acquisitions of the Kansas and Alabama Clusters......... $ 599 $ 450
======= =======
(e) Represents the effect of the acquisition of the
remaining 49% of MS 34, using a portion of the Offering
proceeds
Elimination of minority interest........................ $ (454) $ (303)
======= =======
Amortization of cellular licenses over an assumed
useful life of 20 years.............................. $ 579 $ 434
======= =======
(f) Represents income tax expense, calculated using
statutory income tax rates, applicable to the Offering
adjustments............................................. $ 8 $ 6
======= =======
</TABLE>
19
<PAGE> 22
NOTES TO UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL STATEMENTS
(IN THOUSANDS)
For purposes of determining the pro forma effect of the transactions
described in the previous pages on the Company's Unaudited Pro Forma Condensed
Balance Sheet as of September 30, 1996, the following adjustments have been
made:
<TABLE>
<CAPTION>
AS OF
SEPTEMBER 30, 1996
------------------
<S> <C>
(g) Represents the application of the net proceeds of this Offering to
acquire the remaining 49% of MS 34 and to repay a portion of debt
incurred in the acquisition of the Kansas and Alabama Clusters
Offering of Class A Common Stock, after deducting underwriting
discounts and commissions and estimated expenses of this Offering
(assumes the sale of 1,700,000 shares of Class A Common Stock at $12.00
per share, the midpoint of the range set forth on the cover of this
Prospectus)............................................................ $ 18,472
========
Acquisition of 49% of MS 34. For purposes of the pro forma financial
statements the Company has tentatively considered the fair value of the
acquired tangible assets to approximate their historical carrying
value, with the excess acquisition cost being attributable to cellular
licenses. It is the Company's intention, subsequent to the acquisition,
to evaluate more fully the acquired assets and, as a result, the
allocation of the acquisition costs among tangible and intangible
assets acquired may change............................................. $(11,583)
Retirement of long-term debt........................................... $ (6,889)
--------
$(18,472)
========
(h) Represents the net adjustment to shareholders' equity, other assets and
minority interest to show the result of the write-off of deferred
financing costs associated with the early extinguishment of existing
debt, and the elimination of minority interest due to the acquisition of
49% of MS 34
Other assets........................................................... $ (55)
========
Minority interests..................................................... $ (140)
========
Shareholders' equity................................................... $ 85
========
</TABLE>
(i) Historical US Unwired Inc. Unaudited Pro Forma Condensed Balance Sheet
includes amounts set forth in the following table which represent the
calculation of the purchase price of each acquisition and allocation of the
purchase price to specific tangible and intangible assets and liabilities.
<TABLE>
<CAPTION>
KS AL3 AL4 TOTAL
------- ------- ------- -------
<S> <C> <C> <C> <C>
Working capital............................. $ (60) $ 471 $ 98 $ 509
Property and equipment, net................. 4,626 1,385 3,868 9,879
Cellular licenses........................... 30,545 16,015 23,810 70,370
------- ------- ------- -------
$35,111 $17,871 $27,776 $80,758
======= ======= ======= =======
</TABLE>
20
<PAGE> 23
SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated financial data set forth below for the Company
for the fiscal years ended December 31, 1993, 1994, and 1995, and as of December
31, 1994 and 1995, and as of and for nine months ended September 30, 1996 is
derived from, and qualified by reference to, the consolidated financial
statements of the Company, which financial statements have been audited by KPMG
Peat Marwick LLP, independent certified public accountants. The consolidated
financial statements as of December 31, 1994 and 1995 and September 30, 1996,
and for the years ended December 31, 1993, 1994 and 1995 and the nine months
ended September 30, 1996, and the report thereon, are included elsewhere in this
Prospectus. The selected consolidated financial data set forth below for the
Company as of and for the nine months ended September 30, 1995 is derived from
unaudited consolidated financial statements of the Company included elsewhere in
this Prospectus and have been prepared on the same basis as the audited
financial statements and contain all adjustments, consisting of normal recurring
accruals, that the Company considers necessary for a fair presentation of the
financial position and results of operations for the periods presented. The
selected consolidated financial data set forth below for the Company for the
years ended December 31, 1991 and 1992 and as of December 31, 1991, 1992 and
1993, are derived from unaudited consolidated financial statements not included
elsewhere herein. The selected consolidated financial data set forth below
should be read in conjunction with the "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the Consolidated Financial
Statements of the Company and notes thereto included elsewhere in this
Prospectus. The comparability of the information presented below is materially
affected by acquisitions of cellular Systems made by the Company in 1995 and
1996. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Overview."
<TABLE>
<CAPTION>
NINE MONTHS
FISCAL YEARS ENDED DECEMBER 31, ENDED SEPTEMBER 30,
-------------------------------------------------------------- -----------------------
1991 1992 1993 1994 1995 1995 1996
---------- ---------- ---------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Total revenues.................... $ 9,189 $ 11,212 $ 14,346 $ 22,553 $ 39,252 $ 26,669 $ 43,858
Cost of service................... 2,814 2,963 4,513 7,445 11,430 7,891 11,622
Merchandise cost of sales......... 407 554 720 2,518 3,373 1,923 3,377
General and
administrative.................. 1,908 1,890 1,692 2,498 5,308 3,553 7,078
Sales and marketing............... 1,619 2,124 2,736 3,768 6,262 3,986 5,448
Depreciation and
amortization.................... 1,200 1,337 2,037 2,892 5,686 3,854 6,432
---------- ---------- ---------- ---------- ---------- ---------- ----------
Operating income.................. 1,241 2,344 2,648 3,432 7,193 5,462 9,901
Interest income (expense), net.... 445 373 93 (630) (3,065) (2,018) (4,302)
Other income (expense),
net............................. 5 6 10 25 (32) -- --
Income tax expense................ 588 1,235 1,317 1,914 2,291 1,777 2,375
Minority interest in losses of
subsidiary...................... -- -- 401 439 454 380 303
Equity in income of affiliates.... 69 271 74 398 344 272 224
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income........................ $ 1,172 $ 1,759 $ 1,909 $ 1,750 $ 2,603 $ 2,319 $ 3,751
========== ========== ========== ========== ========== ========== ==========
Net income per share.............. $ 0.11 $ 0.16 $ 0.17 $ 0.16 $ 0.23 $ 0.21 $ 0.33
========== ========== ========== ========== ========== ========== ==========
Weighted average shares
outstanding..................... 10,933,782 10,933,782 10,933,782 11,108,874 11,242,334 11,239,783 11,250,000
========== ========== ========== ========== ========== ========== ==========
Net cash provided by (used in)
operating activities............ (1,260) 3,465 7,537 $ 1,564 $ 6,737 $ 5,612 $ 8,938
Net cash used in investing
activities...................... (2,429) (4,275) (17,244) (5,184) (45,109) (40,824) (48,952)
Net cash provided by (used in)
financing activities............ (497) (1,675) 6,540 5,803 38,149 36,092 43,280
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31, AS OF SEPTEMBER 30,
-------------------------------------------------------------- -----------------------
1991 1992 1993 1994 1995 1995 1996
---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital................... $ 9,682 $ 6,751 $ 1,536 $ 6,322 $ 4,912 $ 4,395 $ 3,035
Property and equipment, net....... 5,371 5,663 11,882 13,261 20,911 21,429 26,407
Cellular licenses, net............ -- -- 10,969 10,095 38,784 39,225 76,355
Total assets...................... 16,506 16,461 29,908 35,640 78,754 77,295 130,933
Long-term debt.................... 2,293 618 7,728 13,020 49,274 47,764 87,682
Total liabilities and minority
interest........................ 3,638 1,834 13,373 16,982 57,351 56,176 105,598
Shareholders' equity.............. 12,868 14,627 16,535 18,658 21,403 21,119 25,335
</TABLE>
21
<PAGE> 24
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with
the Company's Consolidated Financial Statements and notes thereto and other
financial information included elsewhere in this Prospectus.
OVERVIEW
The Company owns and operates cellular communications Systems in 14 RSAs
and one MSA. The Company has been operating cellular Systems since 1987 and has
experienced rapid growth during the last few years. The Company's cellular
subscribers and penetration were approximately 77,000 and 5.4%, respectively, at
September 30, 1996 compared to approximately 9,000 and 2.4% at January 1, 1993.
The Company intends to continue to increase its total number of subscribers
through increased penetration of its existing markets and through acquisitions
of new markets. The Company's results of operations for the periods described
herein will not necessarily be indicative of future performance.
The Company's revenues consist primarily of subscriber revenues (including
access charges and usage charges), roaming revenues (fees charged for providing
services to subscribers of other cellular communications systems when such
subscribers "roam" by placing or receiving a phone call within one of the
Company's service areas) and merchandise sales (sales of cellular phones and
accessories). The Company offers equipment subsidies on phones (averaging
approximately $166 per net subscriber added in the nine months ended September
30, 1996) in order to attract new subscribers and expects to continue this
practice which is consistent with industry norms. Because of such promotional
discounts, increases in merchandise sales typically result in decreases in
operating income. The majority of the Company's revenues are derived from
subscriber revenues. Subscriber revenues and merchandise sales also include
amounts recognized for sales of paging service; however, revenues from paging
are expected to account for less than 4% of the Company's total revenues for the
year ended December 31, 1996.
Average monthly revenue per subscriber (based upon subscriber revenues
only) from its cellular operations decreased to $57.91 in 1995 compared to
$60.77 in 1993. The Company's decrease in average monthly revenue per
subscriber, which is consistent with industry trends, reflects its efforts to
expand its subscriber base and overall penetration by lowering its prices
(including roaming rates) and offering affordable rate plans in its markets. The
Company believes that, by lowering its prices and increasing the quality of its
services, it will build subscriber loyalty in its existing markets, reduce
potential churn and provide a competitive advantage against PCS and other
wireless competitors. The Company anticipates that, although the average monthly
subscriber revenue per subscriber may decline due to additional price decreases
and increased competition, these decreases will eventually be offset by an
enlarged subscriber base and by
increased usage once subscribers begin taking advantage of the full potential
and utility of cellular phone service.
Cost of service consists of the costs of providing wireless service to
subscribers, which includes costs to access local exchange and long distance
carrier facilities, costs of maintaining the Company's wireless network, and
costs associated with subscribers roaming on other carriers' networks. Costs of
merchandise sales consist of inventory costs associated primarily with cellular
phones and related accessories. General and administrative expenses include
billing costs, administrative costs associated with maintaining subscribers,
which include customer service, accounting and other centralized functions, and
provisions for subscriber bad debt. Sales and marketing costs include costs
associated with acquiring subscribers, including sales, advertising and
promotional expenses. Depreciation and amortization include primarily
depreciation expense associated with the Company's property and equipment in
service and amortization associated with its wireless licenses for operational
markets.
EBITDA is a measure commonly used in the telecommunications industry and is
presented to enhance the understanding of the Company's operating results and is
not intended to be a financial performance measure comparable to similarly
titled measures of other companies. EBITDA should not be regarded as an
alternative to either operating income or net income as an indicator of
operating performance, or to cash flows as a measure of liquidity. Furthermore,
EBITDA is not a GAAP-based financial measure, and it should not be
22
<PAGE> 25
considered as an alternative to GAAP-based measures of financial performance.
See "Selected Financial Data."
The comparability of the information presented in Management's Discussion
and Analysis of Financial Condition and Results of Operations is materially
affected by acquisitions the Company completed in 1995 and 1996. On April 30,
1995, the Company acquired the assets of Miscellco Communications, Inc., which
include the Systems serving the Kansas Cluster, for approximately $35.1 million.
On May 15, 1996, the Company acquired the assets of West Alabama Cellular
Telephone Company, Inc., which include the System serving the Alabama-3 RSA, for
approximately $17.9 million. On July 1, 1996, the Company acquired the assets of
the Alabama-4 RSA for approximately $27.8 million. All of these acquisitions
were financed through bank debt.
NINE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
1995
The Company had 76,907 cellular subscribers at September 30, 1996, an
increase of 21,331 or 38.4% from December 31, 1995. At September 30, 1995, the
Company had 48,475 subscribers, an increase of 21,162 or 77.5% from December 31,
1994. For the nine months ended September 30, 1996 and September 30, 1995, net
subscribers added through cellular System acquisitions were 8,800 and 10,900,
respectively. Excluding acquired cellular subscribers, the Company's net
subscribers increased by 12,531 or 22.6% in the nine months ended September 30,
1996 and 10,262 or 37.8% in the nine months ended September 30, 1995. Although
the aggregate number of net subscribers added continues to increase, the
resulting growth rates have declined due to the larger subscriber base.
Management expects that this trend will continue. Of the total subscribers added
in the nine-month period ended September 30, 1996, 61.7% were from direct
Company sales compared to 38.3% added through independent agent and retailer
distribution channels. This reflects the Company's focus on direct retail sales
channels.
REVENUES
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
-------------------
1995 1996
------- -------
(IN THOUSANDS)
<S> <C> <C>
Subscriber revenues.................................... $19,263 $32,635
Roaming revenues....................................... 6,248 9,609
Merchandise sales...................................... 998 1,287
Other revenue.......................................... 160 327
------- -------
Total revenues............................... $26,669 $43,858
======= =======
</TABLE>
Subscriber revenues increased $13.3 million or 68.9% to $32.6 million for
the nine months ended September 30, 1996 from $19.3 million for the nine months
ended September 30, 1995. This increase was primarily due to the increased
number of cellular subscribers in 1996, including those acquired in the
acquisitions of the Kansas and Alabama Clusters. Average monthly cellular
subscriber revenue per subscriber was $54.74 for the nine months ended September
30, 1996 compared to $56.48 for the nine months ended September 30, 1995. The
Company believes the decrease in subscriber revenue per subscriber primarily
reflects price decreases implemented to build subscriber base and stimulate
cellular usage.
Roaming revenues were $9.6 million for the nine months ended September 30,
1996 compared to $6.2 million for the nine months ended September 30, 1995, an
increase of $3.4 million or 54.8%. Growth in the Company's roaming revenues
generally reflected increases in the Company's geographical coverage and market
penetration levels in adjacent markets and the cellular industry as a whole.
Roaming revenues as a percentage of total revenues declined to 21.9% for the
nine months ended September 30, 1996 from 23.4% for the nine months ended
September 30, 1995 as a result of the 68.9% growth in subscriber revenues, which
exceeded the 54.8% increase in roaming revenues. Although the Company expects
total roaming revenues to continue to increase as the Company and the cellular
industry grow, it expects its roaming revenues as a percentage of total revenues
to continue to decline as its subscriber base grows and it reduces roaming
rates.
23
<PAGE> 26
Merchandise sales, which consist primarily of cellular handset sales,
increased to $1.3 million for the nine months ended September 30, 1996 from
$998,339 for the nine months ended September 30, 1995. This $288,256 or 28.9%
increase was primarily due to the increase in subscriber additions partially
offset by a decrease in the average handset sales price. The Company anticipates
continued growth in merchandise sales as a result of increases in net subscriber
additions.
Other revenues, which consist primarily of microwave and management
operations, were $327,844 for the nine months ended September 30, 1996, compared
to $160,077 for the nine months ended September 30, 1995. This represents a
$167,767 or 104.8% increase which resulted primarily from the management
services provided to the PCS Partnership and other non-consolidated affiliates.
However, other revenues remained approximately 0.7% of total revenues for the
nine months ended September 30, 1996 and 1995.
OPERATING EXPENSES
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
---------------------
1995 1996
------- -------
(IN THOUSANDS)
<S> <C> <C>
Cost of service...................................... $ 7,891 $11,622
Merchandise cost of sales............................ 1,923 3,377
General and administrative........................... 3,553 7,078
Sales and marketing.................................. 3,986 5,448
Depreciation and amortization........................ 3,854 6,432
------- -------
Total operating expenses................... $21,207 $33,957
======= =======
</TABLE>
Cost of service increased to $11.6 million for the nine months ended
September 30, 1996 from $7.9 million for the nine months ended September 30,
1995. This increase was primarily attributable to the increased number of
subscribers which resulted in increased costs to access local exchange and long
distance carrier facilities and maintain the Company's expanding wireless
network. While cost of service increased $3.7 million or 46.8%, it decreased as
a percentage of service revenues to 27.3% for the nine months ended September
30, 1996 from 30.7% for the nine months ended September 30, 1995, which was
primarily due to efficiencies gained from the growing subscriber base. Service
revenues equal total revenues less merchandise sales.
Merchandise cost of sales increased to $3.4 million for the nine months
ended September 30, 1996 from $1.9 million for the nine months ended September
30, 1995, an increase of $1.5 million or 79.0%, which was primarily attributable
to the increased number of subscribers. The Company's margin (loss) from
merchandise sales was $2.1 million or 62% of merchandise costs for the nine
months ended September 30, 1996, and $924,179 or 48% for the nine months ended
September 30, 1995. The loss on merchandise sales is considered a cost of adding
net subscribers and, as such, is not deemed to have a material effect on the
Company's results of operations or financial condition. See the discussion of
sales and marketing costs below.
General and administrative costs increased to $7.1 million for the nine
months ended September 30, 1996 from $3.6 million for the nine months ended
September 30, 1995, an increase of $3.5 million or 97.2%. The increase was
largely attributable to the added costs associated with rapid expansion of the
Company's subscriber base. These costs represent salaries for an incremental
increase in the number of customer service representatives and increased costs
of service and collections. As a percentage of service revenues general and
administrative costs increased to 16.6% for the nine months ended September 30,
1996 from 13.8% for the nine months ended September 30, 1995. This increase
reflects the Company's commitment to quality customer service and the aggressive
promotion of its cellular service offset somewhat by economies of scale.
Sales and marketing costs increased to $5.4 million for the nine months
ended September 30, 1996 from $4.0 million for the nine months ended September
30, 1995, an increase of $1.4 million or 35.0%, which was primarily due to
subscriber additions. Sales and marketing costs per net subscriber added
(excluding equipment subsidy) increased to $433 for the nine months ended
September 30, 1996 from $387 for the nine
24
<PAGE> 27
months ended September 30, 1995. After giving effect to equipment subsidy, costs
per net subscriber added increased to $599 for the nine months ended September
30, 1996 from $476 for the nine months ended September 30, 1995, an increase
primarily attributable to added marketing costs in the acquired cellular
Systems, emphasizing the Company's aggressive marketing in newly acquired
Systems. The Company believes that, prior to its acquisition of these Systems,
past marketing efforts in the acquired Systems had been inadequate. The Company
does not expect this trend in costs per net subscriber to continue, as the
increase in the costs is attributable to bringing newly acquired markets up to
the Company's marketing standards. The increases in net cost per subscriber have
reduced results of operations below levels that would have been attained without
the increase; however, these decreases in operating results are not deemed to be
material.
Depreciation and amortization expense increased to $6.4 million for the
nine months ended September 30, 1996 from $3.9 million for the nine months ended
September 30, 1995. This $2.5 million or 64.1% increase was primarily
attributable to the expansion of the Company's cellular Systems, and to an
increase in gross cellular licensing costs and other assets to $82.9 million at
September 30, 1996 from $41.9 million at September 30, 1995.
OPERATING INCOME
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
-------------------
1995 1996
------ ------
(IN THOUSANDS)
<S> <C> <C>
Operating income....................................... $5,462 $9,901
====== ======
</TABLE>
Total operating income increased to $9.9 million for the nine months ended
September 30, 1996 from $5.5 million for the nine months ended September 30,
1995. This increase of $4.4 million or 80.0% was due to increased revenues,
which exceeded increases in operating expenses.
OTHER INCOME (EXPENSE)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
---------------------
1995 1996
------- -------
(IN THOUSANDS)
<S> <C> <C>
Interest expense.................................... $(2,253) $(4,516)
Interest income..................................... 235 214
------- -------
Total other income (expense).............. $(2,018) $(4,302)
======= =======
</TABLE>
Interest expense increased to $4.5 million for the nine months ended
September 30, 1996 from $2.3 million for the nine months ended September 30,
1995. The $2.2 million or 95.7% increase was primarily attributable to an
increase in borrowings, which increased to $95.7 million at September 30, 1996
from $50.1 million at September 30, 1995, to fund the Company's expansion and
capital expenditures, and was partially offset by a decrease in interest income
to $213,952 for the nine months ended September 30, 1996 from $234,771 for the
nine months ended September 30, 1995. The interest expense was further affected
by a decline in the weighted average interest rate to 8.27% at September 30,
1996 from 8.88% at September 30, 1995.
NET INCOME
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
-------------------
1995 1996
------ ------
(IN THOUSANDS)
<S> <C> <C>
Net income............................................. $2,319 $3,751
====== ======
</TABLE>
25
<PAGE> 28
Net income increased to $3.8 million for the nine months ended September
30, 1996 from $2.3 million for the nine months ended September 30, 1995. This
$1.5 million or 65.2% increase was due to the changes described in the various
revenue and expense items which are primarily driven by the 58.7% increase in
subscribers. Net income was also impacted by income tax expense which increased
by $598,517 for the nine months ended September 30, 1996 over the same period in
1995. Income tax expense increased as a result of increased income, the effect
of state income taxes, and changes in the valuation allowance for deferred tax
assets caused primarily by changes in the net operating losses of MS 34, the
Company's 51% owned subsidiary.
EBITDA
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
--------------------
1995 1996
------ -------
(IN THOUSANDS)
<S> <C> <C>
EBITDA................................................ $9,316 $16,333
====== ======
</TABLE>
EBITDA improved to $16.3 million for the nine months ended September 30,
1996 from $9.3 million for the nine months ended September 30, 1995. The $7.0
million or 75.3% increase was primarily the result of increased revenues due to
the increased subscriber base and the related cost efficiencies. As a result,
EBITDA as a percentage of revenues increased to 37.2% for the nine months ended
September 30, 1996 from 34.9% for the nine months ended September 30, 1995.
YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994
The Company had 55,576 cellular subscribers at December 31, 1995, an
increase of 28,263 or 103.5% during 1995. At December 31, 1994, the Company had
27,313 subscribers, an increase of 11,371 or 71.3% during 1994. During 1995 and
1994, net subscribers added through cellular System acquisitions were
approximately 10,900 and 0, respectively. Excluding such acquired cellular
subscribers in 1995, the percentage of net cellular subscriber additions
increased by 63.7%.
REVENUES
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
---------------------
1994 1995
------- -------
(IN THOUSANDS)
<S> <C> <C>
Subscriber revenues.................................. $14,548 $28,802
Roaming revenues..................................... 6,603 8,909
Merchandise sales.................................... 1,002 1,404
Other revenue........................................ 400 137
------- -------
Total revenues............................. $22,553 $39,252
======= =======
</TABLE>
Subscriber revenues increased to $28.8 million in 1995 from $14.5 million
in 1994. This $14.3 million or 98.6% increase was primarily due to the 103.5%
growth in the number of subscribers, including subscribers added in the
acquisition of the Kansas Cluster. Average monthly cellular subscriber revenue
per subscriber was $57.91 in 1995, compared to $56.05 in 1994. The Company
believes this increase in average monthly subscriber revenue per subscriber was
due to the higher subscriber revenue per subscriber in the Kansas Cluster.
Roaming revenues were $8.9 million in 1995 compared to $6.6 million in
1994, an increase of $2.3 million or 34.9%. Growth in the Company's roaming
revenues generally reflected increases in the Company's geographical coverage
and market penetration levels in adjacent markets and the cellular industry as a
whole. Roaming revenues as a percentage of total revenues declined to 22.7% in
1995 from 29.3% in 1994 as a result of the 98.6% growth in subscriber revenues,
which exceeded the 34.9% increase in roaming revenues.
26
<PAGE> 29
Merchandise sales, which consist primarily of cellular handset sales,
increased to $1.4 million in 1995 from $1.0 million in 1994. This $401,204 or
40.0% increase was primarily due to the increase in subscriber additions
partially offset by a decrease in the average handset sales price. The Company
anticipates continued growth in merchandise sales as a result of increases in
subscriber additions.
Other revenues which consist primarily of management, microwave and
voicemail operations, were $136,962 in 1995 compared to $400,257 in 1994. This
$263,295 or 65.8% decrease was primarily the result of the Company's sale of the
voicemail operations in 1994.
OPERATING EXPENSES
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
---------------------
1994 1995
------- -------
(IN THOUSANDS)
<S> <C> <C>
Cost of service...................................... $ 7,445 $11,430
Merchandise cost of sales............................ 2,518 3,373
General and administrative........................... 2,498 5,308
Sales and marketing.................................. 3,768 6,262
Depreciation and amortization........................ 2,892 5,686
------- -------
Total operating expenses................... $19,121 $32,059
======= =======
</TABLE>
Cost of service increased to $11.4 million in 1995 from $7.4 million in
1994, primarily as a result of the 103.5% increase in the number of subscribers
(including acquired subscribers) which resulted in increased costs to access
local exchange and long distance carrier facilities and maintain the Company's
expanding wireless network. While cost of service increased $4.0 million or
54.1% for the year, it decreased as a percentage of service revenues to 30.2% in
1995 from 35.2% in 1994, which was primarily due to efficiencies gained from the
growing subscriber base.
Merchandise cost of sales increased to $3.4 million in 1995 from $2.5
million in 1994, an increase of $854,826 or 34.0%, which was primarily
attributable to the increased number of subscriber additions.
General and administrative costs increased to $5.3 million in 1995 from
$2.5 million in 1994, an increase of $2.8 million or 112.0%. The increase was
primarily attributable to the added costs associated with supporting the
increased subscriber base. These costs represent salaries for an incremental
increase in the number of customer service representatives and increased costs
of service and collections. As a percentage of service revenues, general and
administrative costs increased to 14.0% for 1995 from 11.6% in 1994. This
increase reflects the Company's commitment to quality customer service and its
aggressive promotion of cellular service offset somewhat by economies of scale.
The increase in general and administrative support costs was directly driven by
the acquisition of the Kansas Cluster.
Sales and marketing costs increased to $6.3 million in 1995 from $3.8
million in 1994, an increase of $2.5 million or 65.8%, which was primarily due
to subscriber additions and an increase in start-up marketing costs in newly
acquired markets. Sales and marketing costs per net subscriber added (excluding
equipment subsidy) increased to $360 in 1995 from $332 in 1994. After giving
effect to equipment subsidy, costs per net subscriber added increased to $473 in
1995 from $465 in 1994.
Depreciation and amortization expense was $5.7 million in 1995 compared to
$2.9 in 1994. This $2.8 million or 96.6% increase was primarily attributable to
the expansion of the Company's cellular Systems (including Systems acquired) and
to an increase in gross cellular licensing costs and other assets to $42.1
million at December 31, 1995 from $13.1 million at December 31, 1994.
27
<PAGE> 30
OPERATING INCOME
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
-------------------
1994 1995
------ ------
(IN THOUSANDS)
<S> <C> <C>
Operating income....................................... $3,432 $7,193
====== ======
</TABLE>
Total operating income increased to $7.2 million in 1995 from $3.4 million
in 1994, an increase of $3.8 million or 111.8% due to increased revenues, which
exceeded increases in operating expenses.
OTHER INCOME (EXPENSE)
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
--------------------
1994 1995
------ -------
(IN THOUSANDS)
<S> <C> <C>
Interest expense..................................... $ (790) $(3,401)
Interest income...................................... 160 336
Gain (loss) on sale of assets........................ 25 (32)
-------- -------
Total other income (expense)............... $ (605) $(3,097)
======== =======
</TABLE>
Interest expense increased to $3.4 million in 1995 from $789,856 in 1994.
The $2.6 million or 330.5% increase was primarily attributable to an increase in
borrowings, which increased to $52.1 million at December 31, 1995 from $13.7
million at December 31, 1994, to fund the Company's expansion and capital
expenditures, and was partially offset by an increase in interest income to
$336,253 in 1995 from $160,405 in 1994. The interest expense was further
affected by an increase in the weighted average interest rate to 8.73% in 1995
from 8.51% in 1994.
NET INCOME
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
-------------------
1994 1995
------ ------
(IN THOUSANDS)
<S> <C> <C>
Net income............................................. $1,750 $2,603
====== ======
</TABLE>
Net income increased to $2.6 million in 1995 from $1.8 million in 1994.
This $853,355 or 48.8% increase was due to the changes described in the various
revenue and expense items which are primarily driven by the 103.5% increase in
the number of subscribers. Net income was also impacted by income tax expense
which increased by $376,745 in 1995. Income tax expense increased as a result of
increased income, the effect of state income taxes, and changes in the valuation
allowance for deferred tax assets caused primarily by changes in the net
operating losses of the Company's 51% owned subsidiary.
EBITDA
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
--------------------
1994 1995
------ -------
(IN THOUSANDS)
<S> <C> <C>
EBITDA................................................ $6,324 $12,879
======= =======
</TABLE>
EBITDA improved to $12.9 million in 1995 from $6.3 million in 1994. The
$6.6 million or 104.8% increase was primarily the result of increased revenues
due to the increased subscriber base and the related cost efficiencies. As a
result, EBITDA as a percentage of revenues increased to 32.8% in 1995 from 28.0%
in 1994.
28
<PAGE> 31
YEAR ENDED DECEMBER 31, 1994 COMPARED TO YEAR ENDED DECEMBER 31, 1993
The Company had 27,313 cellular subscribers at December 31, 1994, an
increase of 11,371 or 71.3% during 1994. At December 31, 1993, the Company had
15,942 subscribers, an increase of 7,037 or 79.0% during 1993. During 1994 and
1993, there were no subscribers added through cellular System acquisitions.
REVENUES
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
---------------------
1993 1994
------- -------
(IN THOUSANDS)
<S> <C> <C>
Subscriber revenues.................................. $ 9,059 $14,548
Roaming revenues..................................... 4,085 6,603
Merchandise sales.................................... 541 1,002
Other revenue........................................ 661 400
------- -------
Total revenues............................. $14,346 $22,553
======= =======
</TABLE>
Subscriber revenues increased to $14.6 million in 1994 from $9.1 million in
1993. This $5.5 million or 60.4% increase was primarily due to the 71.3% growth
in the number of subscribers. Average monthly cellular subscriber revenue per
subscriber was $56.05 in 1994, compared to $60.77 in 1993. This 7.8% decrease
was a result of price decreases implemented by the Company to build the
subscriber base and stimulate cellular usage.
Roaming revenues were $6.6 million in 1994 compared to $4.1 million in
1993, an increase of $2.5 million or 61.0%. Growth in the Company's roaming
revenues generally reflects increases in the Company's geographical coverage and
market penetration levels in adjacent markets and the cellular industry as a
whole. Roaming revenues as a percentage of total revenues increased to 29.3% in
1994 from 28.5% in 1993 as a result of significant increases in cell site
additions, primarily in newly acquired markets. These acquisitions resulted in
added geographic coverage and the addition and modification of several roaming
agreements.
Merchandise sales, which consist primarily of cellular handset sales,
increased to $1.0 million in 1994 from $540,961 in 1993. This $461,260 or 85.2%
increase was primarily due to the increase in subscriber additions partially
offset by a decrease in the average handset sales price. The Company anticipates
continued growth in merchandise sales as a result of increases in subscriber
additions.
Other revenue, which consists primarily of revenue from microwave and
voicemail operations, was $400,257 in 1994 compared to $661,369 in 1993. This
$261,112 or 39.5% decrease was primarily the result of the Company's decision to
focus on cellular telephone operations and to decrease voicemail operations,
primarily non-cellular related voicemail.
OPERATING EXPENSES
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
---------------------
1993 1994
------- -------
(IN THOUSANDS)
<S> <C> <C>
Cost of service...................................... $ 4,513 $ 7,445
Merchandise cost of sales............................ 720 2,518
General and administrative........................... 1,692 2,498
Sales and marketing.................................. 2,736 3,768
Depreciation and amortization........................ 2,037 2,892
------- -------
Total operating expenses................... $11,698 $19,121
======= =======
</TABLE>
Cost of service increased to $7.4 million in 1994 from $4.5 million in
1993. This increase was primarily a result of the 71.3% increase in the number
of subscribers which resulted in increased costs to access local exchange and
long distance carrier facilities and maintain the Company's expanding wireless
network. This
29
<PAGE> 32
represented an increase of $2.9 million or 64.4% for the year, and 35.2% and
34.3% of service revenues for 1994 and 1993, respectively. This increase was
principally attributable to start-up costs associated with the Mississippi
Cluster.
Merchandise cost of sales increased to $2.5 million in 1994 from $719,884
in 1993, an increase of $1.8 million or 249.7%, which was primarily attributable
to the increased number of subscribers.
General and administrative costs increased to $2.5 million in 1994 from
$1.7 million in 1993, an increase of $806,131 or 47.4%, which was primarily
attributable to the increase in the costs associated with supporting the
increased subscriber base. However, as a percentage of service revenues general
and administrative costs decreased to 11.8% in 1994 from 12.9% in 1993,
reflecting certain economies of scale.
Sales and marketing costs increased to $3.8 million in 1994 from $2.7
million in 1993, an increase of $1.1 million or 40.7% which was primarily due to
subscriber additions and an increase in start-up marketing costs in newly
acquired markets. Sales and marketing costs per net subscriber added (excluding
equipment subsidy) decreased to $331 in 1994 from $389 in 1993, a decrease
primarily attributable to improved efficiencies. After giving effect to
equipment subsidy, the costs per net subscriber added increased to $465 in 1994
from $414 in 1993.
Depreciation and amortization expense was $2.9 million in 1994 compared to
$2.0 million in 1993. This $855,580 or 42.0% increase was primarily attributable
to the expansion of the Company's cellular Systems and to an increase in gross
cellular licensing costs and other assets to $13.1 million at December 31, 1994
from $12.1 million at December 31, 1993.
OPERATING INCOME
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
-------------------
1993 1994
------ ------
(IN THOUSANDS)
<S> <C> <C>
Operating income....................................... $2,648 $3,432
====== ======
</TABLE>
Total operating income increased to $3.4 million in 1994 from $2.6 million
in 1993, an increase of $783,581 or 29.6% due to increased revenues, which
exceeded increases in operating expenses.
OTHER INCOME (EXPENSE)
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
-----------------
1993 1994
----- -----
(IN THOUSANDS)
<S> <C> <C>
Interest expense........................................ $(177) $(790)
Interest income......................................... 270 160
Gain on sale of assets.................................. 10 25
----- -----
Total other income (expense).................. $ 103 $(605)
===== =====
</TABLE>
30
<PAGE> 33
Interest expense increased to $789,856 in 1994 from $177,472 in 1993. The
$612,384 or 345.1% increase was primarily attributable to an increase in
borrowings, which increased to $13.7 million at December 31, 1994 from $7.7
million at December 31, 1993, to fund the Company's expansion and capital
expenditures, partially offset by a decrease in interest income to $160,405 in
1994 from $269,548 in 1993. The interest expense was further affected by an
increase in the weighted average interest rate to 8.51% in 1994 from 5.85% in
1993.
NET INCOME
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
-------------------
1993 1994
------ ------
(IN THOUSANDS)
<S> <C> <C>
Net income............................................. $1,909 $1,750
====== ======
</TABLE>
Net income decreased to $1.8 million in 1994 from $1.9 million in 1993.
This $158,847 or 8.4% decrease was due to the changes described in the various
revenue and expense items which were primarily driven by the 71.3% increase in
subscribers and related costs of borrowing to finance buildout. Net income was
also impacted by income tax expense, which increased by $597,464 in 1994. Income
tax expense increased as a result of increased income, the effect of state
income taxes, and changes in the valuation allowance for deferred tax assets
caused primarily by changes in the net operating losses of the Company's 51%
owned subsidiary.
EBITDA
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
-------------------
1993 1994
------ ------
(IN THOUSANDS)
<S> <C> <C>
EBITDA................................................. $4,685 $6,324
====== ======
</TABLE>
EBITDA improved to $6.3 million in 1994 from $4.7 million in 1993. The $1.6
million or 34.0% increase was primarily the result of increased revenues due to
the increased subscriber base and the related cost efficiencies. However, EBITDA
as a percentage of revenues decreased to 28.0% in 1994 from 32.7% in 1993. This
was primarily the result of initial start-up operating costs in the newly
acquired markets that had no existing subscriber base.
LIQUIDITY AND CAPITAL RESOURCES
The Company believes the proceeds from this Offering, together with
anticipated cash flows from operations, will be sufficient to fund capital
expenditures and working capital necessary for the continued growth of its
existing cellular operations for the next 12 months. In the ordinary course of
its business, the Company reviews potential acquisition opportunities and
expects to finance such future acquisitions in part with proceeds from this
Offering. Pending such uses, the proceeds will be applied to reduce existing
bank debt incurred to finance recent acquisitions. The Company currently
anticipates that, depending on the availability of favorable acquisition
opportunities and the rate of growth of the Company's cellular operations, it
may require funds in excess of the proceeds of this Offering to finance such
future acquisitions, to expand operations in existing markets, and to provide
working capital.
Historically, the Company has relied on bank financing to fund expansion.
At September 30, 1996, the Company had $95.7 million of debt outstanding. The
Company's long-term borrowings from 1994 through September 30, 1996 were made
through various credit facilities bearing various rates of interest at both
fixed and variable terms ranging from 5.45% to 10.50%, with maturity dates
ranging from December 20, 2002 to December 20, 2003. These facilities are
non-revolving loan agreements under which the Company had borrowed $100.3
million, and at September 30, 1996 approximately $2.1 million remained available
for borrowing under these credit facilities.
31
<PAGE> 34
The Company has initiated discussions with commercial lenders to secure a
credit facility to be available for future acquisition opportunities or other
working capital needs. Based on such discussions, the Company believes that such
a facility would provide for additional borrowings of up to approximately $70.0
million after applying an estimated $6.9 million of the proceeds from this
Offering to repay a portion of existing debt. To the extent that the proceeds
are used for purposes other than to repay existing debt, the Company does not
anticipate that this use would materially impact the Company's ability to obtain
the additional $70.0 million in financing, or materially impact its overall
financial condition.
Net cash provided by operations was $8.9 million for the nine months ended
September 30, 1996, consisting of $3.8 million of net income, $6.4 million of
depreciation and amortization and other adjustments consisting primarily of
changes in current assets and current liabilities. Net cash provided by
operations was $6.7 million in 1995 consisting of $2.6 million of net income,
$5.7 million of depreciation and amortization and other adjustments consisting
primarily of changes in current assets and current liabilities. Net cash
provided by operating activities was $1.6 million and $7.5 million in 1994 and
1993, respectively.
Net cash used in investing activities was $48.9 million for the nine months
ended September 30, 1996, which consisted primarily of capital expenditures for
property and equipment of $3.6 million and the acquisition of cellular
properties of $45.6 million. Net cash used in investing activities was $45.1
million in 1995, which consisted primarily of capital expenditures for property
and equipment of $5.9 million, the acquisition of cellular properties of $35.1
million and investments in unconsolidated subsidiaries of $4.9 million. Net cash
used in investing activities was $5.2 million and $17.2 million in 1994 and
1993, respectively.
Net cash provided by financing activities was $43.3 million for the nine
months ended September 30, 1996, which consisted primarily of additions to
long-term debt of $46.0 million for the acquisition of cellular properties. Net
cash provided by financing activities was $38.1 million in 1995, which consisted
primarily of additions to long-term debt of $40.3 million for the acquisition of
cellular properties. Net cash provided by financing activities was $5.8 million
and $6.5 million in 1994 and 1993, respectively.
The Company estimates that it invested approximately $5.0 million during
the remainder of 1996 and will invest approximately $22.0 million in 1997 for
existing cellular System and capacity expansion and centralized infrastructure
improvements. The Company may be required to make expenditures sooner than
anticipated or in greater amounts than expected based on a number of variables,
including increased subscriber growth, increased losses resulting from
merchandise sales and increased construction costs associated with expanding
coverage areas.
In November and December 1996, the Company entered into agreements to
acquire from seven minority shareholders 49% of the capital stock of MS 34, a
corporation that holds the licenses covering the Mississippi-3 and Mississippi-4
RSAs. The Company presently owns the remaining 51% of the stock. Consummation of
the acquisition is contingent upon, among other things, the successful
completion of this Offering.
In addition, the Company is obligated to fund up to approximately $13.0
million of capital to the PCS Partnership as part of the license acquisition
costs and other working capital needs. The Company funded $2.9 million of this
obligation as of September 30, 1996. The PCS Partnership is subject to the FCC
build-out requirements and will therefore require significant additional amounts
to complete the build-out of its PCS systems. The potential sources of such
additional amounts include vendor loans, loans or capital contributions by the
various partners, or other third party financing. There are no current
agreements or plans with respect thereto. The PCS Partnership has obtained a
commitment from the Rural Telephone Finance Cooperative for $59.0 million of
financing for capital expenditures under which the Company would be required to
guarantee repayment of up to $6.2 million. There can be no assurance that the
build-out of the PCS markets will not cost materially more than is currently
anticipated, or that financing will be available at all or in the absence of
additional guarantees by the Company and other partners. To the extent that the
Company is required to make capital contributions to the PCS Partnership faster
than expected, the capital requirements are greater than anticipated or the
Company elects to take advantage of acquisition opportunities, including those
that may arise through future FCC auctions, the Company may require additional
funding to implement its business strategy.
Mobility bid $9.5 million for the D, E and F-block licenses, of which $2.8
million will be paid as a down payment for the licenses from the $4.0 million
investment that the Company and Cameron have made in
32
<PAGE> 35
Mobility. The federal government will finance the remaining $6.7 million of
license acquisition cost with a 10-year debt facility. Mobility has not yet
developed a plan of financing for the build-out of the PCS Systems. There can be
no assurance that financing for the build-out will be available or that such
financing, if obtained, will not require guarantees or additional capital
contributions by the Company.
Based upon additional financing arrangements under negotiation, and
anticipated cash flows from operations, the Company believes that it will have
sufficient liquidity to accomplish its business objectives. Core business growth
is anticipated to increase the overall borrowing capacity of the Company beyond
current levels, and the Company believes that potential future acquisitions will
increase the capacity even further. The Company also believes that it will be
able to achieve more favorable financing terms after this Offering and that
these more favorable terms will further increase its financing capacity and its
liquidity.
SEASONALITY
The Company, and the wireless communications industry in general, have
historically experienced significant subscriber growth during the fourth
calendar quarter. Accordingly, during such quarter the Company experiences
greater losses on merchandise sales and increases in sales and marketing
expenses. The Company has historically experienced highest usage and revenue per
subscriber during the summer months. The Company expects these trends to
continue.
33
<PAGE> 36
BUSINESS
The Company owns and operates cellular communications systems in 14 RSAs
and one MSA which together have 1.4 million Net Pops. These markets consist
primarily of four clusters that are located in Louisiana, Mississippi, Alabama
and Kansas. In its Louisiana Cluster, the Company markets under the MERCURY
CELLULAR AND PAGING(TM) trade name and in its other clusters under the
CELLULARONE(R) service mark. As of September 30, 1996, the Company served
approximately 77,000 cellular subscribers through cellular Systems covering more
than 72,000 square miles, and served over 14,000 paging subscribers by providing
paging services in its Louisiana market and by reselling such services in
certain other markets. The Company owns a 24 1/3% limited partnership interest
in the PCS Partnership, which, as the successful bidder in the FCC auction, has
been granted five licenses for broadband PCS that cover five BTAs with an
aggregate population of 1.8 million Pops. These PCS markets, together with the
Louisiana Cluster cellular market, are expected to create a large seamless
market traversed by I-10 between Houston and New Orleans. The Company also owns
a 50% interest in Mobility, which was the high bidder for 22 broadband PCS
licenses that cover 22 BTAs with an aggregate of 4.9 million Pops in areas
contiguous to the Company's existing markets. See "PCS Operations."
The Company was incorporated in Louisiana as Mercury, Inc. on March 3, 1967
to conduct telecommunications activities that complemented the local landline
telephone service of an affiliated corporation. See "Certain
Transactions -- Tax-Free Restructuring" for information concerning transactions
in which the Company recently acquired the wireless communications operations of
Cameron Communications Corporation ("Cameron"), an affiliate of the Company
through common control. The principal wholly-owned operating subsidiaries of the
Company are Mercury Cellular Telephone Company ("MCTC"), which owns the licenses
covering the Louisiana Cluster, and Mississippi One Cellular Telephone Company,
which owns the licenses covering the Mississippi-1 RSA and the Alabama-3 and
Alabama-4 RSAs. MCTC, in turn, owns 100% of the stock of Mercury Cellular of
Kansas, Inc. (which owns the licenses covering the Kansas Cluster), a 25%
limited partnership interest in GTE Mobilnet of Texas RSA 21 Limited Partnership
(which owns the licenses covering the Texas-21 RSA), a 24.33% interest in the
PCS Partnership and a 50% interest in Mobility. In addition, the Company owns
51% of the capital stock of MS 34 (which owns the licenses covering the
Mississippi-3 and Mississippi-4 RSAs) and has entered into agreements to acquire
the remaining 49% of the capital stock. See "Use of Proceeds." The Company's
principal affiliates through common control include Cameron, a landline
telephone holding company, and Mercury Information Technologies, Inc., a
technology services company ("MIT").
On September 19, 1996, the Company, Cameron and their respective
wholly-owned subsidiaries entered into an Agreement and Plan of Reorganization,
pursuant to which on October 31, 1996 (i) Cameron transferred all of its assets,
except its 96% interest in MCTC, to Newco, a new wholly-owned subsidiary of
Cameron, (ii) 100% of the stock of Newco was distributed to Cameron's
shareholders, and (iii) Cameron was merged into the Company. Thereafter, Newco
changed its name to "Cameron Communications Corporation." See "Certain
Transactions -- Tax-Free Restructuring."
The Henning family, whose members incorporated the Company and Cameron and
have always been their principal shareholders, has been involved in the
communications industry since W. T. Henning founded a landline telephone company
in 1928 in southwest Louisiana, where it still operates. The Henning family
became involved in the wireless communications industry with the introduction of
paging services in 1980 and cellular services in 1987.
The principal executive offices of the Company are located at One Lakeshore
Drive, Suite 1900, Lake Charles, Louisiana 70629, and its telephone number is
(318) 436-9000.
BUSINESS STRATEGY
GROWTH STRATEGY
The Company believes that the wireless communications industry will
continue to grow as enhanced services are offered at lower prices and as
customer awareness of the productivity, convenience and security
34
<PAGE> 37
benefits associated with wireless communications increases. The Company believes
it is well positioned to take advantage of this growth opportunity. The
Company's growth strategy focuses on the following: (i) internal growth through
increased penetration in the Company's existing markets; (ii) acquisition of
licenses contiguous to the Company's existing market clusters; (iii) acquisition
of new market clusters; and (iv) acquisition of PCS licenses to expand and
complement its wireless network. In addition, the Company believes that by
geographically clustering service areas it can best offer high quality service
at competitive prices with larger, seamless service networks.
OPERATING STRATEGY
Upon acquiring a cellular System, the Company's objective has been to
increase operating cash flow through the following practices:
Dedication to Customer Service. The Company trains its sales force and
customer service representatives in the Company's philosophy that long-term
customer service and satisfaction are critical to the Company's success.
The Company strives to minimize customer churn by maintaining a high level
of customer satisfaction through a variety of techniques, including tying
sales commissions to subscriber retention, outbound telemarketing to
subscribers on a regular basis, maintaining extended live customer service
operation hours, a quarterly customer newsletter and active post-sale
follow-ups for new customers. In addition, the Company provides to
subscribers in most of its markets free roadside assistance services that
include gas, a battery jump-start and tire changing assistance.
Aggressive Marketing of Cellular Service. The Company uses aggressive
marketing and customer maintenance programs to increase subscriber
activations and reduce customer churn. These programs include offering
distinctive local and roaming rate plans to emphasize the "value" and
"advantage" of the Company's cellular service, launching targeted
advertising campaigns which emphasize quality and value, and taking an
active role in community, government and charity organizations. Many of
these programs are designed to distinguish the Company's cellular service
as the "local" quality service provider by stressing local offices, local
sales personnel, the availability of local customer service and the
Company's commitment to the community. Each major market cluster of the
Company is under the responsibility of a local marketing manager.
Management believes that positioning its cellular service as the local
quality service often contrasts favorably with its larger competitors,
which frequently standardize service plans, do not provide local
availability of customer service and use third party billing vendors,
making it more difficult for these competitors to be as responsive to
customer needs.
System Engineering to Increase Signal Coverage. Where practical, the
Company strives to "fill in" the Cellular Geographic Service Area ("CGSA")
within its markets by adding network facilities to increase the coverage of
its radio signal. The Company monitors the signal coverage and selectively
seeks to add additional radio channels and/or cell sites to upgrade the
capacity and reach of the cellular signal, the ultimate goal being to
provide handheld quality network coverage. In addition, the Company has
local technicians and engineers in its markets to maintain the quality of
the local service network and to respond promptly to any System problems.
Strong Retail and Direct Sales Effort. A key element of the Company's
positioning in its markets is the use of 22 local retail stores. A local
direct sales force provides the Company with more control over the sales
process, especially in meeting subscriber growth goals, than if it were to
rely only on independent agents. Although the Company selectively includes
independent agents in its distribution strategy, management believes that
the Company's local presence enhances its ability to provide a higher level
of quality customer service and satisfaction. In addition, in 1995 the
Company began a program that uses Company sales personnel in independent
retail establishments, such as Wal-Mart and Sam's Club, as distribution
channels.
Centralized Upper Management and Backoffice Operations. For those
operations that are common to all markets, the Company takes advantage of
economies of scale by centralizing all the upper management and backoffice
operations at its corporate headquarters. This includes the upper
management for sales, marketing, engineering, customer service, credit and
collection and financial functions. By
35
<PAGE> 38
combining decentralized sales management with the centralized upper
management and backoffice functions, the Company can simultaneously take
advantage of the economies of scale while offering custom service through
the decentralized sales management and sales force.
MARKETS AND SYSTEMS
Cellular Markets
The Company's cellular markets are grouped geographically and strategically
into four clusters, known as the Louisiana, Mississippi, Alabama and Kansas
Clusters. The following table summarizes certain information concerning the
Company's cellular markets.
<TABLE>
<CAPTION>
INTERSTATE
& OTHER % OF HH
COMPANY WIRELINE OR HIGHWAY WITH EBI> DATE OF
MARKET TOTAL POPS OWNERSHIP% NET POPS NON-WIRELINE MILES $35K(A) ACQUISITION
- ------------------------ ---------- ---------- --------- ------------ ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Louisiana Cluster
Lake Charles, LA MSA.... 174,000 100.0% 174,000 WL 102 46.0% Aug. 1987(b)
De Soto, LA-3 B1(c)..... 59,000 100.0 59,000 WL 115 28.1 Apr. 1991(b)
Beauregard, LA-5
B1(c)................. 142,000 100.0 142,000 WL 175 30.6 Mar. 1991(b)
--------- --------- -----
Total Louisiana....... 375,000 375,000 392
--------- --------- -----
Mississippi Cluster
Tunica, MS-1............ 170,000 100.0 170,000 NWL 69 28.4 Apr. 1993
Bolivar, MS-3(d)........ 156,000 100.0 156,000 NWL 66 25.7 Apr. 1993
Yalobusha, MS-4(d)...... 127,000 100.0 127,000 NWL 62 31.5 Apr. 1993
Washington, MS-5(e)..... 160,000 -- -- NWL 76 33.2 Jan. 1994
--------- --------- -----
Total Mississippi..... 613,000 453,000 273
--------- --------- -----
Alabama Cluster
Lamar, AL-3............. 136,000 100.0 136,000 NWL 70 30.5 May 1996
Bibb, AL-4.............. 138,000 100.0 138,000 NWL 66 29.5 Jul. 1996
--------- --------- -----
Total Alabama......... 274,000 274,000 136
--------- --------- -----
Kansas Cluster
Cheyenne, KS-1.......... 27,000 100.0 27,000 NWL 84 32.2 Apr. 1995
Norton, KS-2............ 30,000 100.0 30,000 NWL 0 27.9 Apr. 1995
Wallace, KS-6........... 20,000 100.0 20,000 NWL 39 37.2 Apr. 1995
Trego, KS-7............. 78,000 100.0 78,000 NWL 112 37.1 Apr. 1995
Hamilton, KS-11......... 85,000 100.0 85,000 NWL 17 44.8 Apr. 1995
Hodgeman, KS-12......... 42,000 100.0 42,000 NWL 12 40.1 Apr. 1995
Edwards, KS-13.......... 28,000 100.0 28,000 NWL 6 33.3 Apr. 1995
Cimarron, OK-1(e)....... 24,000 -- -- NWL 7 34.9 Apr. 1995
--------- --------- -----
Total Kansas.......... 334,000 310,000 277
--------- --------- -----
Minority Interest
Chambers, TX-21(f)...... 21,000 25.0 5,300 WL 34 50.4 Apr. 1993
--------- --------- -----
TOTAL................. 1,617,000 1,417,300 1,112
========= ========= =====
</TABLE>
- ---------------
(a) The percentage of households (HH) with effective buying income (EBI) greater
than $35,000 is based on Kagan's Cellular Telephone Atlas 1995. Effective
buying income is comparable to disposable after-tax income.
(b) The Company was the original licensee in these markets.
(c) These are partitioned cellular markets.
(d) These RSAs are licensed to a corporation in which the Company currently owns
a 51% interest. The Company has entered into agreements to acquire the
remaining 49% interest. The acquisition is contingent upon, among other
things, the successful completion of this Offering. See "Use of Proceeds."
(e) The Mississippi-5 RSA and Oklahoma-1 RSA are operated under interim
authority granted by the FCC pending auction of the licenses by the FCC. The
number of Company subscribers in these RSAs is insignificant.
(f) The Texas-21 RSA is owned by a partnership in which the Company owns a 25%
interest and in which GTE Mobilnet, which operates the System, owns a 75%
interest.
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<PAGE> 39
Louisiana Cluster
The Company's cellular operations began in August 1987 with the Lake
Charles, LA MSA, which the Company acquired in the FCC cellular lottery. The
Louisiana Cluster includes 174,000 Net Pops in the Lake Charles, LA MSA, 59,000
Net Pops in the Louisiana-3 RSA and 142,000 Net Pops in the Louisiana-5 RSA.
This cluster comprises more than 6,000 square miles and uses 21 cell sites,
which effectively cover 100% of the total geographic area. An additional five
cell sites are expected to be added by the end of 1997 to upgrade handheld
service. An upgrade to the cellular System in this cluster during 1995 included
the addition of digital channels. This upgrade enhanced System capacity,
provided a new marketing avenue for digital service and prepared the cluster to
complement the planned PCS Systems in which the Company has an interest through
the PCS Partnership. See "Markets and Systems -- PCS Markets." All licenses in
the Louisiana Cluster are in the "wireline band" (see "Governmental
Regulation -- Licensing of Cellular Telephone Systems") and are therefore
commonly referred to as wireline cellular licenses.
Although the Louisiana Cluster is comprised of a mid-sized MSA and parts of
two RSAs, the Company manages the cluster as if it were one market with both
urban and suburban features. The Louisiana Cluster is traversed by I-10, which
is a major source of roaming revenues. Lake Charles is the seat of parish
government for Calcasieu Parish, one of the larger parishes in Louisiana.
Several major petrochemical refineries are located in this market area, one of
which recently announced an $860 million expansion of its Lake Charles facility.
I-10 is a heavily traveled artery for many commuting employees, vendors and
contractors who conduct business with these entities. The Port of Lake Charles,
located at the edge of Lake Charles on the Calcasieu River (which opens into the
Gulf of Mexico), is a major bulk cargo port which handles cargo generated by the
local petrochemical facilities. Other major industries for the area include
lumber and agricultural related businesses that are heavy users of cellular
service. There are four riverboat casinos based in Lake Charles that use
cellular service for communications and data transmission. These casinos attract
customers from the surrounding area, including east Texas, and thereby generate
significant traffic which provides roaming revenues to the Company.
Additionally, a large facility of Northrop-Grumman, a major U.S. government
contractor, and McNeese State University are located in Lake Charles.
The Company's cellular service in the Louisiana Cluster is marketed under
the trade name MERCURY CELLULAR AND PAGING(TM). The Company's principal cellular
competitors in these markets are Western Cellular in the Lake Charles, LA MSA
and Centennial Cellular in the Louisiana-3 and -5 RSAs. Each of these
competitors uses the CELLULARONE(R) service mark.
Mississippi Cluster
In April 1993, the Company acquired the Mississippi-1 RSA and a 51%
interest in MS 34 which holds the licenses to operate the Mississippi-3 and
Mississippi-4 RSAs. In November and December 1996, the Company entered into
agreements with David Bailey, Wirt A. Yerger, III, Robert G. Mounger, William M.
Mounger, III, William Handell, III, E.B. Martin, Jr. and James A. Murrell, III
to purchase for $11.6 million their respective shares of common stock of MS 34.
These shares represent the remaining 49% interest in the corporation. The
consummation of the transaction is contingent upon, among other things, the
successful completion of this Offering. The Company manages for MS 34 the
design, construction and installation of the control point, base station and
business office sites, and the daily operations of the cellular System, for
which the Company is paid a monthly management fee and is reimbursed for its
capital costs and expenses. The Mississippi Cluster has 613,000 Pops, of which
453,000 are Net Pops. This cluster covers more than 11,000 square miles and uses
22 cell sites (with five additional sites expected to become operational by the
end of 1997), all of which can be upgraded to provide digital service. The
Mississippi Cluster is located just south of Memphis, Tennessee and north of
Jackson, Mississippi. All licenses in the Mississippi Cluster are in the
"non-wireline band" (see "Governmental Regulation -- Licensing of Cellular
Telephone Systems") and are therefore referred to as non-wireline cellular
licenses.
The Company earns substantial roaming revenues in the Tunica, Mississippi-1
RSA market, which has 170,000 Net Pops and is directly adjacent to the Memphis,
TN MSA. Some of this revenue results from traffic attributable to the several
casinos located near Tunica. Much of the roaming traffic in the RSA is along
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<PAGE> 40
U.S. Highway 61 and Interstate Highway 55, both of which run north and south
from Memphis and continue south through Mississippi to Baton Rouge, Louisiana.
The Bolivar, Mississippi-3 RSA market services 156,000 Net Pops and covers
over 4,200 square miles. Two of the larger towns in this RSA are Greenwood and
Indianola. A number of colleges, including Mississippi State University,
Mississippi University for Women, Delta State University, the University of
Mississippi and Mississippi Valley State University, are located within 100
miles of this market. Each city and town is easily accessible to Greenwood and
surrounding towns via U.S. Highways 82 and 49, as well as Mississippi Highway 7.
The Yalobusha, Mississippi-4 RSA market is located next to the
Mississippi-3 RSA and has 127,000 Net Pops. The town of Grenada is the principal
community in this RSA. Area economic resources include timber and manufacturing.
The Company's cellular service in the Mississippi Cluster is marketed under
the CELLULARONE(R) service mark. Its principal cellular competitors in these
markets are BellSouth Mobility Services and Cellular South.
Alabama Cluster
The Company acquired the Alabama-3 RSA in May 1996 and acquired the
Alabama-4 RSA in July 1996. The Alabama Cluster covers more than 10,000 square
miles and uses 20 cell sites. An additional seven cell sites are expected to be
added by the end of 1997. The Company operates non-wireline cellular licenses in
this cluster, which has 274,000 Pops, all of which are Net Pops.
The Alabama Cluster is located along the western border of Alabama, and the
northern tip of the Alabama-3 RSA is directly adjacent to the Mississippi-4 RSA.
This cluster borders the Tuscaloosa, Birmingham and Montgomery, AL MSAs.
The Lamar, Alabama-3 RSA market is positioned along Alabama's western
border and serves 136,000 Net Pops. Interstate Highways 20 and 59, as well as
U.S. Highways 43 and 82, traverse the RSA en route to Tuscaloosa and Birmingham.
Traffic to and from Tuscaloosa, which is the site of the University of Alabama
and is less than 50 miles from the Alabama-3 RSA border, is a major source of
roaming revenue. Demopolis, which has two 130-acre industrial parks, is the
largest city in the RSA and is located on U.S. Highway 80.
The Bibb, Alabama-4 RSA market is adjacent to the Alabama-3 RSA and serves
138,000 Net Pops. Located less than 100 miles from Birmingham and Montgomery,
this RSA has 66 interstate and other highway miles. The major industries of
Alabama-3 include cattle, timber, cotton, milk and grain. The city of Selma, an
industrial community, is the hub of the RSA.
The Company's cellular service in this cluster is marketed under the
CELLULARONE(R) service mark. The Company's principal cellular competitors in
these markets are BellSouth Mobility Services in the Alabama-3 RSA and Frontier
Cellular in the Alabama-4 RSA.
Kansas Cluster
The Company acquired the Kansas Cluster in April 1995. This market has
334,000 Pops, of which 310,000 are Net Pops. It covers more than 45,000 square
miles and uses 30 cell sites. An additional seven cell sites are expected to be
added by the end of 1997. The Company operates the non-wireline cellular
licenses in this cluster.
The Kansas Cluster covers the entire western half of the State of Kansas
and has several U.S. highways running through it. Interstate Highway 70 extends
westward to connect the markets to Denver, Colorado and extends eastward to the
Topeka, KS and Kansas City, MO MSAs. While this market is relatively thinly
populated, it has features that are indicative of high cellular usage including
a concentration of small businesses and farms, longer commute times and well
traveled roads. The Kansas Cluster includes 277 interstate and other highway
miles. Major industries include oil and gas drilling, cattle and agriculture.
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<PAGE> 41
The Company's cellular service in the Kansas Cluster is marketed under the
CELLULARONE(R) service mark. The Company's principal cellular competitor in each
of these markets is Kansas Cellular, a consortium of rural telephone companies.
Paging Markets
The Company owns and operates its own paging network within the Louisiana
Cluster with paging licenses in the 158.10 and 152.84 MHz range. It
cross-markets paging and cellular services in this market. Paging is also
marketed in Beaumont, Texas and parts of the Mississippi Cluster through a
resale agreement with other providers.
The Louisiana paging license was acquired in 1980 and currently covers a
population of approximately 868,000 persons. The Company began marketing paging
in the Beaumont market, which has a population of approximately 369,000 persons,
in July 1995. As of September 30, 1996, the Company had over 14,000 paging
subscribers. In December 1994 and April 1995 the Company entered into agreements
to provide regional and nationwide paging services to the Company's paging
subscribers.
PCS Markets
The Company owns a 24 1/3% limited partnership interest in the PCS
Partnership, which has been granted five broadband PCS licenses in the FCC's
C-block auction, for a total of $61.2 million. These PCS markets offer a
strategic fit to the Company's existing cellular markets in the Louisiana
Cluster, with which they create a large seamless market cluster that covers the
areas along I-10 between Houston and New Orleans. The table below summarizes
certain information concerning these PCS markets:
<TABLE>
<CAPTION>
INTERSTATE
& OTHER % OF HH
COMPANY HIGHWAY WITH EBI>
MARKET TOTAL POPS OWNERSHIP% NET POPS MILES $35K(A)
----------------------------------- ---------- ----------- -------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Baton Rouge, LA BTA #032........... 659,000 24.33% 160,000 369 48.1%
Beaumont, TX BTA #034.............. 450,000 24.33 109,000 293 41.9
Hammond, LA BTA #180............... 99,000 24.33 24,000 153 34.4
Lafayette, LA BTA #236............. 514,000 24.33 125,000 343 35.7
Lufkin, TX BTA #265................ 151,000 24.33 37,000 70 36.1
--------- -------
TOTAL.................... 1,873,000 455,000 1,228
========= =======
</TABLE>
- ---------------
(a) The percent of households (HH) with effective buying income (EBI) greater
than $35,000 is based on The 1995 PCS Atlas and Data Book. Effective buying
income is comparable to disposable after-tax income.
The PCS competitors in these markets will include Wireless Co. and PCS
PrimeCo. The PCS operations will also compete with cellular operators in these
markets such as AT&T Wireless Services, ALLTEL, BellSouth Mobility Services,
Centennial Cellular, GTE and US Cellular, among others.
The general partner of the PCS Partnership has contracted with the Company
to manage the design, construction and daily operations of the Lafayette,
Beaumont and Lufkin BTAs, for which the Company is paid a monthly management fee
and is reimbursed for its expenses. The general partner of the PCS Partnership
is Wireless Management Corporation, a Louisiana corporation owned in equal
proportions by Fort Bend Communications, Inc., a subsidiary of Fort Bend
Telephone Company, RBS Communications, Inc., a subsidiary of EATELCORP, Inc. and
MIT, an affiliate of the Company. The limited partners in the PCS Partnership,
in addition to the Company, are EATELCORP, Inc., a Louisiana corporation, Fort
Bend Telephone Company, a Texas corporation, and Meretel Wireless, Inc., a
Louisiana corporation. Each of the limited partners is a telecommunications
company engaged in landline and cellular operations in markets outside of the
Company's markets.
39
<PAGE> 42
The Company owns a 50% interest in Mobility, which was the high bidder on
22 broadband PCS licenses in the FCC's recent D, E and F-block auction. The
licenses, which have not yet been granted, cover 4.9 million Pops in 22 BTAs
that are contiguous to the Company's wireless network. The table below
summarizes certain information concerning these PCS markets.
<TABLE>
<CAPTION>
NUMBER OF COMPANY
STATE BTAS TOTAL POPS OWNERSHIP% NET POPS
---------------------------------------- --------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
Louisiana............................... 4 1,464,000 50.0% 732,000
Texas................................... 3 658,000 50.0 329,000
Mississippi............................. 3 547,000 50.0 273,500
Alabama................................. 1 250,000 50.0 125,000
Arkansas................................ 2 261,000 50.0 130,500
Kansas.................................. 7 1,378,000 50.0 689,000
Oklahoma................................ 1 49,000 50.0 24,500
Colorado................................ 1 282,000 50.0 141,000
-- --------- ---------
TOTAL......................... 22 4,889,000 2,444,500
== ========= =========
</TABLE>
The PCS competitors in these markets will include Sprint Telecom JV, AT&T
Wireless PCS, PCS PrimeCo. and GTE, among others. The PCS operations will also
compete in these markets with cellular operators such as Centennial Cellular, US
Cellular, AT&T Wireless Services, BellSouth Mobility Services and GTE, among
others.
Mobility is a limited liability company in which the Company and Cameron
each own a 50% interest. See "Certain Transactions." The Company has been
designated as the manager of Mobility and is currently negotiating with Cameron
the terms under which the Company will manage the design, construction and daily
operations of Mobility's PCS Systems.
CELLULAR AND PAGING OPERATIONS
Marketing
The Company's marketing strategy for its cellular and paging operations is
designed to generate continued net subscriber growth, while simultaneously
maintaining low subscriber addition costs. For the nine months ended September
30, 1996, the Company's average net cost to add a net cellular subscriber was
$599 (including an equipment subsidy of $166). The Company seeks to achieve
lower subscriber addition costs by using an in-house sales and marketing staff
and retail outlets and by maintaining a low churn rate relative to industry
averages.
In training and compensating its sales force, the Company emphasizes the
importance of customer service, high penetration levels and minimum costs per
subscriber. The Company's sales staff has a two-tier structure. A retail sales
force handles walk-in traffic, whereas a targeted sales staff solicits certain
industrial, governmental and other potential subscribers. The Company believes
that its internal sales force is better able than independent agents to select
and screen new subscribers and select pricing plans that match subscriber means
and needs. The Company motivates its direct sales force to sell appropriate rate
plans to subscribers by linking payment of commissions to subscriber retention,
thereby reducing churn. While the Company selectively uses independent agents,
it places internal sales personnel in the more highly visible and critical
market areas. The Company compensates the independent agents similarly, by
linking the agents' compensation to customer retention and lower churn. The
Company believes that this mix of internal sales personnel and independent
agents increases the Company's market presence and distribution capacity,
minimizes churn and maximizes customer retention and long-term subscriber
growth. In 1995, the Company implemented a retail distribution program that uses
independent retail establishments, such as Wal-Mart and Sam's Club, as
distribution channels. Under this program the retailer supplies cellular
telephones and accessories which are sold by the Company's sales personnel from
a kiosk at the retail location. The retailer retains the full purchase price of
the equipment sold, and the Company benefits by enrolling the purchaser as a new
subscriber. In each
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<PAGE> 43
of the last two years, subscriber additions attributed to the program accounted
for less than 4% of total net subscriber additions for the period.
"Mercury Monitor" is a program that seeks to ensure each customer is
enrolled in the most appropriate service program for his or her usage. This
program is implemented through the Company's sales force, customer service
personnel and a special division called Customer Care which is primarily
responsible for the program. Mercury Monitor not only enhances customer loyalty,
which reduces churn, but also provides an after-sale survey of how well the
sales force and customer service personnel performed in meeting the subscriber's
needs. This allows the Company to continually monitor and improve the various
sales and customer programs. In addition, the program promotes sales and
customer referrals and makes subscribers aware of additional calling features,
such as voicemail related services, call waiting and call forwarding.
The Company's sales force works principally out of the Company's retail
stores, in which the Company offers a full line of cellular products and
services. The Company operates 22 retail stores, 21 of which are fully equipped
to handle sales, customer service and telephone maintenance, and one of which
handles only paging sales and service. Certain of these stores are also
authorized warranty repair centers. The Company's stores provide
subscriber-friendly retail environments (large selection, an expert sales staff
and convenient locations) which make the sales process quick and easy for the
subscriber.
Products and Services
In addition to providing high-quality cellular telephone service in each of
its markets, the Company also offers, at no additional charge, various custom
calling features such as call forwarding, call waiting, conference calling and
no-answer transfer. Additionally, voice message storage and retrieval services
are offered without additional charge in the Kansas Cluster and at nominal rates
in the other clusters. The Company also sells cellular and paging equipment at
discount prices as an incentive to attract customers.
In July 1996, the Company introduced in the Louisiana Cluster, and intends
to make available in its other cellular markets, a service that allows a
cellular subscriber to combine all of his or her telephone numbers (home,
business, cellular and pager) into a single number. Subscribers can instruct the
service to reach them at more than one telephone number or location at different
times of the day or to continue calling other locations until the subscriber is
located. This state-of-the-art technology gives someone calling a cellular
subscriber the option to leave a message or to remain on hold while the system
outdials predetermined phone numbers. When the system reaches the subscriber,
the subscriber has the option of immediately connecting to the caller to begin a
conversation or to connect the caller to the voice mailbox and listen while the
caller leaves a message. The Company is currently evaluating voice dialing and
intends to implement it when it becomes feasible.
Several rate plans are presented to subscribers so that each can choose the
plan that will best fit his or her expected calling needs. The Company designs
rate plans on a market-by-market basis, unlike some of its competitors that
offer only standardized rate plans. The Company's local sales market managers
also initiate ideas for new rate plans depending upon local market and
competitive conditions. Generally, rate plans consist of a high user plan, a
medium user plan, a basic plan and an economy plan. Most rate plans combine a
fixed monthly access fee, per minute usage charges and custom-calling features
in a package which is intended to provide value to the customer while enhancing
airtime use and revenues for the Company. In general, rate plans which include a
higher monthly access fee typically include a lower usage rate per minute. In
some markets, statewide long distance calling without additional long distance
charges is offered under certain rate plans. The Company conducts an on-going
review of competitors' equipment, service and pricing to maintain the Company's
competitiveness. Revisions to pricing of service plans and equipment are made as
appropriate to conditions in the local marketplace.
In most of its markets, the Company offers an emergency roadside assistance
service that is available on a 24-hour basis without additional charge to
cellular subscribers. This service, which the subscriber accesses by pressing
"*SOS," provides three gallons of gasoline, a battery jump-start and tire
changing assistance.
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<PAGE> 44
Reciprocal agreements between each of the Company's cellular Systems and
the cellular Systems of other operators allow their respective subscribers to
place calls in most cellular service areas throughout the country. Roamers are
charged usage fees which are generally higher than a given cellular System's
regular usage fees, thereby resulting in a higher profit margin. Roaming revenue
is a substantial source of revenue to the Company because a number of its
cellular Systems are located along major travel corridors and because certain of
the Company's Systems are in early stages of their growth cycle. The Company
subscribes to "net settlement" services through its roaming clearing house
arrangements. Net settlement provides for electronic exchange of funds between
carriers for roaming services and is administered through the clearing house and
a designated financial institution. This arrangement reduces the cost of billing
and collecting for these services.
Customer Service
Customer service is an essential element of the Company's marketing and
operating philosophy. The Company is committed to attracting new subscribers and
retaining existing subscribers by providing consistently high-quality customer
service both through its central office and in the local markets. In each of its
cellular service areas the Company maintains a local staff, including a sales
market manager, customer service representatives, technical staff, sales
representatives and installation and repair personnel. Each cellular service
area initiates its own customer-related functions such as credit evaluation,
subscriber activation, account adjustments and rate plan changes. Through the
use of sophisticated monitoring equipment, engineering technicians are able to
monitor the technical performance of the cellular service areas and respond
promptly to any need.
The Company's customers are able to report cellular telephone service or
account problems to a local office representative. The subscriber can also speak
with a customer service representative about technical issues or problems from
7:00 a.m. to 7:00 p.m. at the main customer service center located at the
corporate offices. In addition, the Company has a technical representative on
call 24 hours per day to respond to emergency subscriber needs. Whereas most
competitors either strictly centralize or decentralize customer service
functions, the Company has structured its customer service both ways to meet the
particular needs of any subscriber at any given time.
System Development and Expansion
The Company develops its cellular service areas by adding channels to
existing cell sites and by building new cell sites. Such development is designed
to increase capacity and improve coverage in direct response to projected
subscriber demand, which is calculated for each cellular service area on a
cell-by-cell basis. These projections involve a traffic analysis of usage by
existing subscribers and an estimation of the number of additional subscribers
in each service area. In calculating projected subscriber demand, the Company
builds into its design assumptions a maximum call "blockage" rate of 1%
(percentage of calls that are not connected on the first attempt at peak usage
times during the day). After calculating projected subscriber demand, the
Company determines the most cost-efficient manner of meeting the projected
demand through a combination of augmenting channel capacity in existing cell
sites and building new cell sites.
The table below sets forth, by market, as of the dates indicated, the
number of the Company's operational and planned additional cell sites.
<TABLE>
<CAPTION>
CELL SITES
------------------------------------------
ADDITIONAL SITES
PLANNED BY
MARKETS AT DECEMBER 31, 1996 DECEMBER 31, 1997
--------------------------------------------------- --------------------- -----------------
<S> <C> <C>
Louisiana Cluster.................................. 21 5
Mississippi Cluster................................ 22 5
Alabama Cluster.................................... 20 7
Kansas Cluster..................................... 30 7
</TABLE>
Cell site expansion is expected to enable the Company to provide better
quality handheld coverage, continue to add subscribers, enhance use of the
Systems by existing subscribers, increase roamer traffic due to
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<PAGE> 45
the larger geographic area covered and further enhance the overall efficiency of
the network. The Company believes that the increased cellular coverage will have
a positive impact on market penetration and subscriber usage.
The Company continues to evaluate expansion through acquisitions of other
cellular and PCS properties that will further enhance its network. In evaluating
acquisition targets, the Company considers, among other things, demographic
factors, including population size and density, traffic patterns, cell site
coverage and required capital expenditures. In the ordinary course of its
business, the Company analyzes acquisition opportunities as they come to its
attention. In November and December 1996 the Company entered into agreements to
acquire from seven minority shareholders the remaining 49% interest in the
subsidiary which owns the cellular licenses covering Mississippi-3 and
Mississippi-4 RSAs. The consummation of the acquisition is contingent on the
successful completion of this Offering. See "Markets and Systems -- Mississippi
Cluster" and "Markets and Systems -- System Development and Expansion."
PCS OPERATIONS
General
As the successful bidder in the FCC's C-block auction, the PCS Partnership
has been awarded five PCS licenses covering 1.8 million Pops in five BTAs. These
PCS markets and the Company's Louisiana Cluster cellular market are expected to
create a large seamless market along I-10 between Houston and New Orleans. Each
of these BTA markets is presently in the design and engineering stage. The
Company also owns a 50% interest in Mercury Mobility, L.L.C. ("Mobility"), which
was the high bidder for 22 broadband PCS licenses that cover 22 BTAs with an
aggregate of 4.9 million Pops in areas contiguous to the Company's existing
markets. See "PCS Operations."
PCS is a new generation of wireless communications, offering customers
advanced, secure, two-way digital wireless services and applications. Services
that permit sophisticated call management, enhanced two-way messaging and,
eventually, high-speed data and video transmission, will enable customers to
better manage personal and business needs. The Company believes that the
introduction of PCS into the wireless market will stimulate demand for wireless
communications services, attract customers who are not currently subscribers to
wireless service and increase usage by current wireless customers. PCS will
compete with existing cellular telephone service, and will provide features not
currently offered by cellular providers.
Auction Process
The PCS Partnership participated in the C-block auction as a Small
Business, as defined by FCC rules, and the Company believes that the PCS
Partnership has satisfied all requirements necessary to qualify as a Small
Business, and it will continue to take any actions needed to maintain such
status. Nonetheless, if the PCS Partnership is found by the FCC to be ineligible
or otherwise disqualified from holding C-block PCS licenses, the FCC could
impose substantial financial and regulatory penalties on it, including the
refusal to grant PCS licenses.
Mobility participated in the FCC's D, E and F-block auction, which ended on
January 14, 1997 and was the high bidder for 22 broadband licenses covering 4.9
million Pops in 22 BTAs contiguous to the Company's existing markets. Mobility
participated in the F-block auction as a Small Business and the Company believes
that Mobility has satisfied all requirements necessary to qualify as a Small
Business. These licenses have not been granted, and there can be no assurance
that, if they are granted, the grants will not be withdrawn upon reconsideration
by the FCC or upon review by a court of competent jurisdiction.
Planned PCS Strategy
At present, PCS operators are free to choose from among several competing
digital signal transmission technologies, or standards, that are not
interoperable. These different technologies are known as GSM, CDMA and TDMA.
None of these competing technologies has yet emerged as dominant among PCS
systems. The PCS Partnership has recently entered into an agreement with Lucent
Technologies, Inc. to
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provide the PCS Partnership with PCS infrastructure, including switches and
handsets that use CDMA. Mobility has not selected a digital signal transmission
technology. There can be no certainty that CDMA will become the, or even a,
dominant technology in the United States. If CDMA does not become the dominant
standard or is not able to compete successfully with other PCS technologies, the
PCS Partnership could be deprived of revenues from PCS customers who roam into
the PCS Partnership's markets and could lose PCS customers who become
dissatisfied because they are unable to roam outside the PCS Partnership's
markets. See "Risk Factors -- Certain PCS Risks." However, the Company believes
that these technological impediments to the ability of subscribers to a PCS
System to roam into cellular Systems or other PCS Systems will be resolved and
that the ultimate economic effect of PCS will be to increase from two to eight
the number of potential competitors in a given market. The Company perceives
this as an opportunity for it to enter additional markets that otherwise may not
have been available to it at attractive prices and to take advantage in those
markets of the Company's experience in wireless communications obtained through
the operation of its cellular Systems.
The PCS Partnership's existing markets are contiguous to the Company's
Louisiana Cluster, thereby creating a substantially larger overall wireless
cluster that stretches along I-10 between Houston and New Orleans. This corridor
has historically high traffic density that generates substantial roaming
traffic. The Company intends to provide its cellular subscribers and the PCS
Partnership's subscribers with the ability to roam seamlessly throughout the
Company's Louisiana Cluster and the PCS Partnership's markets as soon as
technically feasible at a reasonable cost. Each of the BTAs in the PCS
Partnership's market has many positive attributes as a stand-alone market.
According to The 1995 PCS Atlas and Data Book, each BTA has a central
metropolitan area with concentrated population densities. Each market is
expected to continue enjoying population growth over the next few years and each
has high interstate or other highway traffic volume.
In addition, the markets covered by the licenses for which Mobility was the
high bidder in the recently completed FCC auction are contiguous to the
Company's existing cellular clusters in Louisiana, Mississippi, Alabama and
Kansas. If the licenses are ultimately granted, the addition of these PCS
markets will expand and complement the Company's wireless network.
Financing
The PCS Partnership's overall financing plan involves three sources. First,
the federal government will finance the license acquisition cost of $61.2
million with a 10-year debt facility under which only interest, at the 10-year
U.S. Treasury Note rate, is paid for the first six years and principal is
amortized in equal installments over the last four years. Second, the partners
have committed to make capital contributions of up to a total of $42.0 million,
of which the Company has committed to contribute up to $13.0 million (of which
$2.9 million has been contributed to date), for working capital requirements.
Finally, the equipment and infrastructure build-out will require external
financing estimated at $69.0 million. The PCS Partnership has obtained a
financing commitment from the Rural Telephone Finance Cooperative for $59.0
million under which the Company will guarantee repayment of up to $6.2 million.
There can be no assurance that the build-out of the PCS markets will not cost
materially more than is currently anticipated, or that additional financing, if
necessary, will be available at all in the absence of additional guarantees by
the Company and other partners.
Mobility bid $9.5 million for certain D, E and F-block licenses, of which
$2.8 million will be paid as a down payment from the investment of $4.0 million
that the Company and Cameron have made in Mobility. The federal government will
finance the remaining $6.7 million of license acquisition cost with a 10-year
debt facility under which only interest, at the 10-year U.S. Treasury Note rate,
is paid for the first two years and principal is amortized in equal installments
over the last eight years. Mobility has not yet developed a plan of financing
for the build-out of the PCS Systems. There can be no assurance that financing
for the build-out will be available or that such financing, if obtained, will
not require guarantees or additional capital contributions by the Company.
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TRADE NAME; SERVICE MARK
In its Louisiana Cluster the Company uses the trade name MERCURY CELLULAR
AND PAGING(TM) and in its other clusters uses the CELLULARONE(R) service mark.
The Company has no federal service mark registration of MERCURY CELLULAR AND
PAGING(TM) and, while it has not encountered any conflict with the use of that
name in Louisiana, it cannot be certain that such a conflict will not arise or
that such name could be used in other markets if desired.
CELLULARONE(R) is a service mark registered with the United States Patent
and Trademark Office. The service mark is owned by CellularOne(R) Group, a
Delaware general partnership comprised of CellularOne(R) Marketing, Inc., a
subsidiary of Southwestern Bell Mobile Systems, together with CellularOne(R)
Development, Inc., a subsidiary of AT&T Wireless Services, Inc. and Vanguard
Cellular Systems, Inc. The Company uses the CELLULARONE(R) service mark pursuant
to its licensing agreement with CellularOne(R) Group. The licensing agreement
requires the Company to provide high quality cellular telephone service to its
customers and to maintain a certain minimum overall customer satisfaction rating
in surveys commissioned by CellularOne(R) Group. The agreement has an original
five-year term expiring in April 1998 and, assuming compliance by the Company
with the provisions of the agreement, may be renewed at the Company's option for
three additional five-year terms.
AT&T Wireless, which had been the single largest user of the CELLULARONE(R)
service mark, has reduced its use of the mark. If for some reason the name
CELLULARONE(R) were to suffer diminished marketing appeal, the Company's ability
both to attract new subscribers and retain existing subscribers could be
materially impaired. In such circumstances or otherwise, the Company may be
required to develop a new service mark. Competitors of the Company possess, and
others may develop over time, branding with significantly greater name
recognition than that of the Company. A failure by the Company to maintain
existing rights to its current cellular branding or to develop suitable
alternatives thereto would have a material adverse effect on the Company's
ability to market its products and services and could require the Company to
invest significant additional funds to develop such alternatives.
EMPLOYEES AND LABOR RELATIONS
The Company considers its labor relations to be good, and none of its
employees is covered by a collective bargaining agreement. As of September 30,
1996, the Company employed a total of 250 persons.
PROPERTIES
The Company leases approximately 40,000 square feet for its principal
executive offices, which are located in Lake Charles, Louisiana. The Company
owns two and leases 20 retail sales locations, which include administrative
offices and inventory storage space, and leases locations for microwave, cell
site and switching equipment.
LEGAL PROCEEDINGS
There are no material, pending legal proceedings to which the Company or
any of its subsidiaries or affiliates is a party or of which any of their
property is subject which, if adversely decided, would have a material adverse
effect on the Company. For information concerning certain legal proceedings
relating to FCC license grants, see "Risk Factors -- Certain PCS Risks,"
"Governmental Regulation" and "-- PCS Operations -- Auction Process."
CERTAIN RESTRICTIONS
A Shareholders' Agreement between the Company and the minority shareholders
of MS 34 restricts transfers of shares, provides certain rights of first refusal
if shares are transferred and requires the affirmative vote of holders of 65% of
the shares to approve any business combination, any extension by the Company of
cellular telephone coverage from its Mississippi-1 RSA System into MS 34's
markets, any transaction between the subsidiary and the Company (or any other
shareholder of MS 34) and any financing of the
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<PAGE> 48
subsidiary exceeding $10.0 million. The Shareholders' Agreement will terminate
upon consummation of the Company's acquisition of the shareholders' minority
interests. See "Markets and Systems -- Mississippi Cluster."
The partnership agreement of the PCS Partnership provides that during the
term of the partnership, which expires December 31, 2015, and for two years
thereafter, no partner or its affiliates will compete (or own more than a 1%
interest in any entity that competes) with the PCS Partnership in the geographic
areas covered by the licenses acquired by the PCS Partnership in the C-block
auction. These provisions are expressly made applicable to any entity that
acquires a partner, but the acquiring entity is given 12 months within which to
dispose of any of its operations that violate the noncompetition provision. The
effect of this provision may be to make the Company a less attractive candidate
for acquisition by any entity with operations that would violate the
noncompetition provision. The partnership agreement further provides that
partnership interests may not be transferred without the consent of the general
partner and a majority of the limited partnership interests. Finally, although
the partners, including the Company, are required to make capital contributions
up to specified amounts, none is required without its express consent to bear
any other financial risk of the PCS Partnership such as providing or acting as a
guarantor for the PCS Partnership's financing. See "-- PCS Operations -- Planned
PCS Strategy; Financing."
THE CELLULAR TELEPHONE INDUSTRY
Overview
Cellular telephone service is provided by a wireless communications System
that uses radio frequencies to transmit voice and data. Broadly defined, the
wireless communications industry also includes one-way radio applications, such
as paging or beeper services, and two-way radio applications, such as cellular,
PCS and enhanced specialized mobile radio ("ESMR"). Historically, each
application has been licensed and operates in a distinct radio frequency block.
Introduced in 1983, cellular service is the predominant form of wireless
voice communications service currently available, with two cellular providers in
each market. Operating in a portion of the radio spectrum from 830-870 MHz,
cellular service is capable of providing high quality, high capacity service to
and from mobile, portable and stationary telephones. Cellular handsets are
affordable and easy to use. Fully equipped, multi-cell cellular Systems are
capable of handling thousands of calls at any given time and thus are capable of
providing service to hundreds of thousands of subscribers in a given market.
Over the past decade, cellular service has grown dramatically with over 33.8
million cellular subscribers in the United States as of December 31, 1995. The
following table sets forth certain domestic cellular industry statistics derived
from the Data Survey Results published semi-annually by the Cellular Telephone
Industry Association:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------
1991 1992 1993 1994 1995
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
CELLULAR INDUSTRY STATISTICS
Total Service Revenues (in billions)................... $ 5.8 $ 7.8 $10.9 $14.2 $19.0
Ending Cellular Subscribers (in millions).............. 7.6 11.0 16.0 24.1 33.8
Subscriber Growth...................................... 43.0% 46.0% 45.1% 50.8% 40.0%
Average Monthly Service Revenue per Subscriber......... $74.10 $70.13 $67.13 $59.08 $54.90
Average Monthly Subscriber Revenue per Subscriber...... $64.96 $61.40 $58.74 $51.48 $47.59
Ending Penetration..................................... 3.0% 4.4% 6.2% 9.4% 13.0%
</TABLE>
These statistics represent results for the cellular industry in the United
States as a whole. Average Monthly Service Revenue per Subscriber reflects per
subscriber revenue including roaming revenue, and Average Monthly Subscriber
Revenue per Subscriber reflects per subscriber revenue excluding roaming
revenue. In general, rural markets, where the Company concentrates its cellular
operations, were licensed later by the FCC than urban markets and, consequently,
have a shorter operating history. The Company has operated cellular Systems
since 1987. While the Company's cellular subscriber base is growing more rapidly
than the industry average, the Company's level of penetration is lower than the
overall industry average.
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The Company believes that certain demographic characteristics of rural
markets facilitate commercial use of its cellular network. As compared to urban
residents, rural residents generally travel greater distances by personal
vehicle and have access to fewer public telephones along their routes. In
addition, the Company's cellular service area includes a high percentage of
business customers with substantial needs for wireless communications, such as
those employed in agriculture and oil and gas, and also includes numerous
destinations for outdoor recreational activities, such as boating, fishing and
hunting, which often increase cellular usage. The Company believes that these
factors will sustain demand for wireless communication services in the rural
marketplace.
Roaming revenues are generated by subscribers of other cellular carriers
traveling through the Company's cellular service area. Reciprocal agreements
among cellular System operators allow subscribers to place and receive calls in
most cellular service areas throughout the country. Roaming revenues result in
higher margins because roaming calls are usually priced at higher rates than
local calls and the Company does not incur sales commissions or other costs to
attract roaming customers.
Operation of Cellular Systems
Cellular telephone service is capable of providing high quality, high
capacity service to and from mobile, portable and fixed radio telephones.
Cellular telephone technology is based upon the division of a given market area
into a number of regions, or "cells," which in most cases are contiguous. Each
cell contains a low-power transmitter-receiver at a "base station" or "cell
site" that communicates by radio signal with cellular telephones located in the
cell. A cell generally has a radius ranging from two miles to more than 25
miles. Cell boundaries are determined by the strength of the signal emitted by
the cell's transmitter-receiver. Each cell site is connected to a MTSO (mobile
telephone switching office), which, in turn, is connected to the local landline
telephone network.
When a cellular subscriber in a particular cell enters a number, the
cellular telephone sends the call by radio signal to the cell's
transmitter-receiver, which then sends it to the MTSO. The MTSO completes the
call by connecting it with the landline telephone network or another cellular
telephone unit. Incoming calls are received by the MTSO, which instructs the
appropriate cell to complete the communications link by radio signal between the
cell's transmitter-receiver and the cellular telephone. By leaving the cellular
telephone on, a signal is emitted so the MTSO can sense in which cell the
cellular telephone is located. The MTSO also records information on system usage
and subscriber statistics.
FCC rules require that all cellular telephones be functionally compatible
with cellular telephone Systems in all markets within the United States and with
all frequencies allocated for cellular use, so that a cellular telephone may be
used wherever a subscriber is located, subject to appropriate arrangements for
service charges. Changes to cellular telephone numbers or other technical
adjustments to cellular telephones by the manufacturer or local cellular
telephone service businesses may be required, however, to enable the subscriber
to change from one cellular service provider to another within a service area.
Because cellular telephone Systems are fully interconnected with the
landline telephone network and long distance networks, subscribers can receive
and originate both local and long distance calls from their cellular telephones.
Cellular telephone Systems operate under interconnection agreements with various
local exchange carriers and interexchange carriers. The interconnection
agreements establish the manner in which the cellular telephone System
integrates with other telecommunications systems. By law, the cellular operator
and the local landline telephone company must cooperate in the interconnection
between the cellular and landline telephone systems, to permit cellular
subscribers to call landline subscribers and vice versa. The technical and
financial details of such interconnection arrangements are subject to
negotiation and vary from system to system. On August 8, 1996, the FCC
promulgated new regulations governing the interconnection of wireless and
landline systems. If these regulations survive pending legal challenges
substantially as enacted, they may ultimately lower the interconnection rates to
be paid by the Company and increase interconnection revenues paid to the
Company.
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THE PCS INDUSTRY
Overview
PCS is a term commonly used in the United States to describe a portion of
radio spectrum (1850-1990 MHz) that has been divided by the FCC into six blocks
(blocks A-F) to be used by PCS licensees to provide wireless communications
services. The first portions of PCS spectrum (the A, B and C-blocks, each 30
MHz) have been auctioned by the FCC as of May 1996, and licenses have been
granted for operating in the A, B and C-blocks. The second portions of the PCS
spectrum (the D, E and F-blocks, each 10 MHz) have been auctioned by the FCC as
of January 14, 1997. Licenses have not been granted for operating in these
blocks. PCS will initially compete directly with existing cellular telephone,
paging and specialized mobile radio services. PCS will also include features
which are not currently offered by cellular providers, such as data
transmissions to and from portable computers, advanced paging services and
facsimile services. The Company believes that PCS providers will be the first
direct wireless competitors to cellular providers and the first to offer mass
market all-digital mobile networks that will increase security of communications
and capacity. In addition, PCS providers may be the first to offer mass market
wireless local loop applications, in competition with wired local communications
services. See "-- Government Regulation" for a discussion of the FCC auction
process and allocation of wireless licenses.
Operation of PCS Systems
PCS Systems and cellular Systems use similar technologies and hardware (for
example, PCS Systems use the same type of "cell site" architecture), but operate
on different frequencies and may use different technical and network standards.
As a result, as discussed further below, it initially may not be possible for
users of one type of System to "roam" on a different type of System outside of
their service area, or to hand off calls from one type of System to another.
This is also true for PCS subscribers seeking to roam in a PCS service area
served by operators using different technical standards.
PCS Systems are expected to operate under one of three principal digital
signal transmission technologies, or standards, that have been proposed by
various operators and vendors for use in PCS Systems: GSM, CDMA or TDMA, all
three of which are currently incompatible with each other. Accordingly, at the
present time a subscriber of a system that uses one technology will be unable to
use his handset when traveling in an area not served by PCS operators using the
same technology, unless the subscriber carries a dual-band handset that permits
the subscriber to use the cellular system in that area. Such dual-band handsets
are just becoming available and are expected to be more expensive than
single-band handsets. The Company expects that it will begin offering dual-band
handsets to its customers when the reliability of such handsets has been
satisfactorily demonstrated and when they are available at affordable prices or
competitive factors warrant their introduction. The Company cannot predict when
these events will occur.
COMPETITION; NEW TECHNOLOGY
Competition in the wireless communications industry is intense. Competition
for subscribers among wireless licensees is based primarily upon the services
and features offered, the technical quality of the wireless system, customer
service, system coverage, capacity and price. Such competition may increase to
the extent that licenses are transferred from smaller, stand-alone operators to
large, better capitalized and more experienced wireless communications
operators.
In each of its cellular markets the Company has one cellular competitor,
including BellSouth, Centennial Cellular, Frontier Cellular, Kansas Cellular and
Western Cellular, and will face new competition from up to six PCS licensees in
each of its cellular markets. The PCS Partnership's principal competitors in its
PCS markets are Wireless Co. and PCS PrimeCo, which will provide PCS services,
and the existing cellular providers, which include AT&T Wireless, GTE, US
Cellular and others. Mobility's principal competitors in its PCS markets are
Sprint Telecom JV, AT&T Wireless PCS, PCS PrimeCo. and GTE, among others, which
will provide PCS services, and the existing cellular providers, which include
Centennial Cellular, US Cellular, AT&T Wireless Services, BellSouth Mobility
Services and GTE, among others. The Company also competes with paging and
dispatch companies, resellers and landline telephone service providers.
Potential
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<PAGE> 51
users of cellular systems may, however, find their communications needs
satisfied by other current and developing technologies. One- or two-way paging
or beeper services that feature voice messaging and data display as well as tone
only service may be adequate for potential subscribers who do not need to speak
to the caller. In the future, cellular service may also compete more directly
with traditional landline telephone service providers. See "Risk
Factors -- Competition."
The FCC requires all commercial wireless System operators to provide
service to "resellers" at non-discriminatory rates. A reseller provides cellular
service to customers but does not hold an FCC license or own infrastructure
facilities. Instead, the reseller buys blocks of cellular telephone numbers and
capacity (minutes) from a licensed carrier and resells service through its own
distribution network to the public. Thus, a reseller is both a customer of a
cellular licensee's services and also a competitor of that licensee. Several
small resellers currently operate in competition with the Company's Systems.
The PCS businesses of Mobility and the PCS Partnership will directly
compete in each market with up to five other PCS providers and with the two
existing cellular service providers. Such cellular providers have typically been
operational for a number of years. Many of them and many of the PCS providers
have significantly greater financial and technical resources than those
available to the Company, the PCS Partnership or Mobility. Cellular providers
may upgrade their systems to provide comparable services in competition with the
PCS Partnership's PCS Systems. The Company believes that being first to offer
PCS services in a market will be a key competitive advantage. The PCS
Partnership's goal is to achieve significant market penetration by aggressively
marketing competitively priced PCS services, offering enhanced services not
currently provided by analog or digital cellular operators and providing
superior customer service. In addition, the Company believes that the PCS
Partnership and Mobility can become low-cost providers of PCS services by taking
advantage, in those BTAs in which the Company will manage PCS operations, of the
existing business infrastructure established for the Company's cellular
operations, including management, marketing, billing and customer service
functions, and by emphasizing efficient customer acquisition and retention.
The cost of PCS handsets to the PCS Partnership and Mobility initially will
be higher than the Company's cost of cellular handsets. In order to compete
effectively with sellers of analog cellular handsets, the PCS Partnership and
Mobility may have to subsidize the sale of its PCS handsets to a greater extent
than sales of cellular handsets are typically subsidized.
The Company expects that it, the PCS Partnership and Mobility will face
increased competition from entities providing other communications technologies
and services. While some of these technologies and services are currently
operating, others are being developed or may be developed in the future. See
"Risk Factors -- Competition."
The FCC has licensed SMR dispatch System operators to construct "enhanced
specialized mobile radio" digital mobile communications systems on existing SMR
frequencies, referred to as ESMR, in many areas throughout the United States,
including most of the areas in which the Company operates. As a result of
advances in digital technology, ESMR operators have begun to design and deploy
digital mobile networks that increase the frequency capacity of ESMR systems to
a level that may be competitive with that of wireless systems. A limited number
of ESMR operators have recently begun offering short messaging, data services
and interconnected voice telephone services on a limited basis. Several ESMR
licensees have recently announced their intention to merge into one company and
plan to build and operate digital mobile networks in most major United States
markets.
The FCC has also allocated radio channels to a satellite system in which
transmissions from mobile units to satellites may augment or replace
transmissions to cellular or PCS cell sites. Several companies have announced
plans to design, construct, deploy and operate satellite-based
telecommunications systems worldwide. American Mobile Satellite Corporation has
designed a geosynchronous earth orbit satellite system for communications
services, which has recently begun providing voice services. Several low earth
orbit ("LEO") satellite systems have been proposed that would use multiple
satellites to provide worldwide coverage. The first LEO system is proposed for
service in 1998. In addition, others have applied to the FCC for licenses to
operate satellite communications and video transmission systems in the 28 GHz Ka
band. The
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<PAGE> 52
Company does not currently view such systems as direct competitors, and in some
cases, such systems may complement the Company's service offerings.
Continuing technological advances in communications and FCC policies that
encourage the development of new spectrum-based technologies may result in new
technologies that compete with cellular and PCS systems. In addition, the
Omnibus Budget Reconciliation Act of 1993 requires, among other things, the
allocation to commercial use of a portion of 200 MHz of the spectrum currently
reserved for government use. It is expected that some portion of the spectrum
that is reallocated will be used to create new land-mobile services or to expand
existing land-mobile services.
GOVERNMENTAL REGULATION
The FCC regulates the licensing, construction, operation, acquisition and
sale of cellular and PCS Systems in the United States pursuant to the
Communications Act of 1934, as amended from time to time, and the rules,
regulations and policies promulgated by the FCC thereunder (the "Communications
Act"). The Communications Act governs applications to construct and operate
cellular and PCS Systems, licensing and administrative appeals and technical
standards for the provision of cellular and PCS service. The FCC also regulates
coordination of proposed frequency usage, height and power of base station
transmitting facilities and types of signals emitted by such stations. In
addition, the FCC regulates (or forbears from regulating) certain aspects of the
business operations of cellular and PCS Systems.
Licensing of Cellular Telephone Systems
For cellular licensing purposes, the FCC established 734 discrete
geographically defined market areas comprising 306 MSAs and 428 RSAs. In each
market area, the FCC awarded only two cellular licenses authorizing the use of
radio frequencies for cellular telephone service. The allocated cellular
frequencies were divided into two equal 25 MHz blocks. One block of frequencies
(known as the "wireline band") and the associated operating license were
initially reserved for exclusive use by entities owned and controlled by local
landline telephone companies or their affiliates. The second block of
frequencies (known as the "non-wireline band") initially was reserved for use by
entities that did not provide landline telephone service in the market area.
Upon the issuance of a construction permit, either wireline or nonwireline, such
construction permit could be sold to any qualified buyer, regardless of its
affiliation with a landline telephone company. The FCC generally prohibits a
single entity from holding an interest in both the wireline and the nonwireline
licensee in the same market.
Cellular authorizations are issued generally for a 10-year term beginning
on the date of the grant of the initial construction permit. Under FCC rules,
the authorized service area of a cellular provider in each of its markets is
referred to as the CGSA. A cellular licensee has the exclusive right to serve
the entire area that falls within the licensee's MSA or RSA for a period of five
years after the grant of the licensee's construction permit.
At the end of the five-year period, however, the licensee's exclusive CGSA
rights become limited to the area actually served by the licensee as of that
time, as determined pursuant to a formula adopted by the FCC. After the
five-year period any entity may apply to serve portions of the MSA or RSA not
being served by the licensee. The five-year exclusivity period has expired for
most licensees and parties have filed unserved area applications. After the
five-year exclusive period has expired, any entity may apply to serve any
unserved area of the market that comprises at least 50 contiguous square miles
outside of the licensee's CGSA.
Near the conclusion of the 10-year license term, licensees must file
applications with the FCC for renewal of their licenses. The FCC has established
rules and procedures to process cellular renewal applications filed by existing
carriers and the competing applications filed by renewal challengers. The
renewal proceeding is a two-step hearing process. The first step of the hearing
process is to determine whether the existing cellular licensee is entitled to a
renewal expectancy and otherwise remains basically qualified to hold a cellular
license. This first step is subject to waiver by the FCC upon a request by a
competing applicant proposing to provide service that far exceeds the service
presently being provided by the incumbent licensee. If no such waiver is
granted, two criteria are evaluated to determine whether the existing licensee
will receive a
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<PAGE> 53
renewal expectancy: (i) whether the licensee has provided "substantial" service
during its past license term, defined as service which is sound, favorable and
substantially above a level of mediocre service which minimally might justify
renewal; and (ii) whether the licensee has substantially complied with
applicable FCC rules and policies and the Communications Act. Under this second
criterion, the FCC will not grant a renewal expectancy if a licensee has
demonstrated a pattern of noncompliance. If the FCC grants the licensee a
renewal expectancy during the first step of the hearing process and the licensee
is basically qualified, its license renewal application will be automatically
granted and any competing applications will be denied. If however, the FCC
denies the licensee's request for renewal expectancy or grants an applicant's
request for waiver of the first step, the licensee's application will be
comparatively evaluated under specifically enumerated criteria with the
applications filed by competing applicants.
Cellular radio service providers also must satisfy a variety of FCC
requirements relating to technical and reporting matters. One such requirement
is the coordination of proposed frequency usage with adjacent cellular users,
permittees and licensees in order to avoid electrical interference between
adjacent systems. In addition, the height and power of base station transmitting
facilities and the type of signals they emit must fall within specified
parameters. The FCC has also provided guidelines respecting cellular service
resale practices and the terms under which certain ancillary services may be
provided through cellular facilities.
Cellular and PCS systems are subject to certain Federal Aviation
Administration regulations respecting the location, lighting and construction of
transmitter towers and antennae and may be subject to regulation under the
National Environmental Policy Act and the environmental regulations of the FCC.
State or local zoning and land use regulations also apply to the Company's
activities. The Company uses common carrier point-to-point microwave facilities
to connect cell sites and to link them to the main switching office. These
facilities are separately licensed by the FCC and are subject to regulation as
to technical parameters and service.
The Communications Act preempts state and local regulation of the entry of,
or the rates charged by, any provider of commercial mobile radio service
("CMRS") or any private mobile radio service ("PMRS"), which includes cellular
(and PCS) service.
Transfers and Assignments of Cellular Licenses
The Communications Act and FCC rules require the FCC's prior approval of
the assignment or transfer of control of a construction permit or license for a
cellular system. Subject to FCC approval, a license or permit may be transferred
from a non-wireline entity to a wireline entity, or vice versa. Non-controlling
interests in an entity that holds a cellular license or cellular system
generally may be bought or sold without prior FCC approval. Any acquisition or
sale by the Company of cellular interests may also require the prior approval of
the Federal Trade Commission and the Department of Justice, if over a certain
size, as well as any state or local regulatory authorities having competent
jurisdiction.
In addition, the FCC's rules prohibit the alienation of any ownership
interest in an RSA application, or any entity holding such an application, prior
to the grant of a construction permit. For unserved cellular areas, no change of
control may take place until after the FCC has granted both a construction
permit and a license and the licensee has provided service to the public for at
least one year. These restrictions affect the ability of prospective purchasers,
including the Company, to enter into agreements for RSA and unserved area
acquisitions prior to the lapse of the applicable transfer restriction periods.
The restriction on sale of interests in RSA and unserved area applications and
on agreements for such sales should not have a greater effect on the Company
than other prospective buyers.
Licensing of PCS Systems
A PCS system operates under a protected geographic service area license
granted by the FCC for a particular market on one of six frequency blocks
allocated for broadband PCS service. The FCC has divided the United States and
its possessions and territories into PCS markets made up of 493 BTAs and 51
MTAs. As many as six licensees will compete in each PCS service area. The FCC
has allocated 120 MHz of spectrum into six individual blocks, each of which is
allocated to serve either MTAs or BTAs. The spectrum allocation
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<PAGE> 54
includes two 30 MHz (A and B Blocks) licensed for each of the 51 MTAs, one 30
MHz block (C Block) licensed for each of the 493 BTAs and three 10 MHz blocks
(D, E and F Blocks) licensed for each of the 493 BTAs. A PCS license will be
awarded for each MTA or BTA in every block, for a total of more than 2,000
licenses.
Under the FCC's rules, no CMRS carrier may hold an attributable interest in
licenses for more than 45 MHz of PCS, cellular and SMR services regulated as
CMRS where there is significant overlap in any geographic area (significant
overlap will occur when at least 10% of the population of the PCS licensed
service area is within the CGSA(s) and/or SMR service area(s)). For example, an
entity may not hold an attributable interest (defined as a controlling or more
than 20% ownership interest) both in a cellular licensee and a 30 MHz PCS
licensee that holds licenses for geographic areas with significant overlaps.
When mutually exclusive applications (i.e., two or more applications
competing for the same service in the same geographic area) are filed for the
same MTA or BTA, those licenses will be awarded pursuant to auctions. The FCC
has adopted comprehensive rules that outline the bidding process, describe the
bidding application and payment process, establish penalties for certain bid
withdrawals, default or disqualification, establish regulatory safeguards,
reserve two of the six frequency blocks (the C and F-blocks) for "entrepreneurs"
and small businesses. The FCC has already completed the auction of, and granted
licenses for the A, B and C-block. The FCC has completed the auction of the D, E
and F-block licenses, but licenses have not yet been granted.
All PCS licenses will be granted for a 10-year period, at the end of which
they must be renewed. The FCC has adopted specific standards to apply to PCS
renewals, under which the FCC will award a renewal expectancy to a PCS licensee
that (i) has provided substantial service during its past license term and (ii)
has substantially complied with the Communications Act. All 30 MHz broadband PCS
licensees must construct facilities that offer coverage to one-third of the
population of their service area within five years of their initial license
grants and to two-thirds of the population within 10 years. Licensees that fail
to meet the coverage requirements may be subject to forfeiture of the license.
FCC rules restrict the voluntary assignments or transfers of control of C and
F-block licenses. During the first five years of the license term, any proposed
assignee or transferee must meet the eligibility criteria for participation in
the entrepreneur block auction at the time the application for assignment or
transfer of control is filed, or the proposed assignee or transferee must hold
other licenses for C and F-blocks and, at the time of receipt of such licenses,
have met the same eligibility criteria. Any transfers or assignments during the
remaining 10 years of the license term are subject to unjust enrichment
penalties, i.e., forfeiture of any bidding credits and acceleration of any
installment payment plans should the assignee or transferee not qualify for the
same benefits. Violations of the Communications Act or the FCC's rules could
result in license revocations, forfeitures or fines. Non-controlling interests
in any entity that holds a PCS license or PCS System generally may be bought or
sold without FCC approval. Any acquisition or sale by the Company or PCS
Partnership of PCS interests may also require the prior approval of the Federal
Trade Commission and the Department of Justice if over a certain size, as well
as state or local regulatory authorities having competent jurisdiction.
For a period of up to five years after the grant of a PCS license (subject
to extension), a PCS licensee will be required to share spectrum with existing
licensees that operate certain fixed microwave systems within its license area.
To secure a sufficient amount of unencumbered spectrum to operate its PCS
Systems efficiently and with adequate population coverage, the PCS Partnership
will need to relocate many of these incumbent licenses. There can be no
assurance that the PCS Partnership will be successful in reaching timely
agreements with the existing microwave licensees needed to construct and operate
its PCS Systems or that any such agreements will be on terms favorable to it.
Foreign Ownership
The Communications Act prohibits the holding of a common carrier license
(such as a cellular or PCS license) by a corporation of which more than 20% of
the capital stock is owned directly or beneficially by aliens. This requirement
cannot be waived by the FCC. When a corporation controls another entity that
holds an FCC license, such corporation may not have more than 25% of its capital
stock owned directly or
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<PAGE> 55
beneficially by aliens unless the FCC finds that the public interest would be
served by such additional foreign ownership. Failure to comply with these
requirements may result in the FCC issuing an order requiring divestiture of
alien ownership to bring the licensee into compliance with the Communications
Act. The Company has no knowledge of any present foreign ownership in violation
of these restrictions. The Company's Articles of Incorporation permit it to
redeem shares of Common Stock that are held by persons whose ownership would
cause a violation of the Communications Act or would prevent the Company from
holding or materially delay it from obtaining any license. See "Description of
Capital Stock -- Certain Charter, By-Law and Statutory Provisions -- Redemption
of Capital Stock."
Telecommunications Act of 1996
On February 8, 1996, the Telecommunications Act of 1996 (the
"Telecommunications Act") was signed into law, substantially revising the
regulation of communications. The Telecommunications Act seeks to enhance
competition and remove barriers to market entry, while deregulating the
communications industry to the greatest extent possible. To this end, local and
long-distance communications providers will, for the first time, be able to
compete in the other's market, and telephone and cable companies will likewise
be able to compete. To facilitate the entry of new carriers into existing
markets, the Telecommunications Act imposes certain interconnection and equal
access requirements on incumbent carriers. Additionally, all communications
carriers providing interstate communications services must contribute to the
federal universal service support mechanisms that the FCC will establish. The
Company cannot predict the outcome of the FCC's rulemaking proceedings to
promulgate regulations to implement the new law or the effect of the new
regulations on cellular service or PCS, and there can be no assurance that such
regulations will not adversely affect the Company's business or financial
condition.
At present, cellular providers, other than the regional Bell operating
companies, have the option of using only one designated long distance carrier.
The Telecommunications Act codifies the policy that CMRS providers will not be
required to provide equal access to long distance carriers. The FCC, however,
may require CMRS carriers to offer unblocked access (i.e., implemented by the
subscriber's use of a carrier identification code or other mechanisms at the
time of placing a call) to the long distance provider of the subscriber's
choice. The FCC has recently terminated its inquiry into the imposition of equal
access requirements on CMRS providers. The FCC recently adopted rules
implementing the interconnection policies imposed by the Telecommunications Act,
various aspects of which are being appealed in Federal court. While it is too
soon to predict the actual effect of these new rules, the Company believes that
they will result in a decrease in the Company's interconnection expense.
The Company believes that it is in compliance with all material
requirements under governmental regulations governing its operations, including
those of the FCC, the Department of Justice and the Federal Trade Commission.
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<PAGE> 56
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
directors and executive officers of the Company.
<TABLE>
<CAPTION>
NAME AGE OFFICE
------------------------------------------- --- ---------------------------------------
<S> <C> <C>
William L. Henning, Jr..................... 43 Chairman, Chief Executive Officer and
Director
Robert Piper............................... 38 President, Chief Operating Officer and
Director
Dusty J. Dumas............................. 33 Chief Financial Officer
Michael Clark.............................. 43 Vice President/General Manager
Paul Clifton............................... 39 Vice President/Engineering and
Technical Services
Thomas G. Henning.......................... 37 Secretary, General Counsel and Director
William L. Henning, Sr..................... 74 Director
John A. Henning............................ 40 Director
</TABLE>
WILLIAM L. HENNING, JR. has been involved since 1976 in the senior
management of entities comprising the landline telephone operations (the
"Landline Entities") of Cameron, an affiliate of the Company, and since 1984 in
the senior management of entities now comprising the Company's wireless
communications operations (the "Wireless Entities"), some of which were owned by
Cameron until consummation of the restructuring described under "Certain
Transactions -- Tax-Free Restructuring." Such management capacities have
included Director, Chairman, President and Vice President. Mr. Henning's time in
recent years has been allocated between the Wireless Entities (which since the
restructuring comprise the Company) and the Landline Entities of Cameron. After
consummation of this Offering, Mr. Henning will devote his time primarily to the
Company. Mr. Henning has served as a Director and President of the Company since
1988. Prior to that time he was the Company's General Manager for more than 12
years. Mr. Henning, a founder of the facilities-based long distance operations
of the Company, managed such operations as President from 1988 until it was sold
in 1990. He has for more than five years served as President of Mercury
Information Technologies, Inc. ("MIT") (see "Certain Transactions -- Affiliate
Transactions -- Management and Accounting Services"), which owns and operates a
cable television franchise, a voice mail service and an Internet access service.
Since 1991 he has served as a director of First National Bank of Lake Charles.
ROBERT PIPER joined the Company in 1985 as a comptroller. He was Vice
President and General Manager of the Company's long-distance operations from
1987 until such operations were sold in 1990, and of Wireless Entities,
including the Company, from 1987 until 1994, when he became Chief Financial
Officer with responsibility also for mergers and acquisitions. From 1995 until
the present time he has been the President and Chief Operating Officer of
Wireless Entities, including the Company. He served on the Board of Directors of
CTIA (the Cellular Telephone Industry Association) from 1992 to 1994.
DUSTY J. DUMAS joined the Company in January 1994 as its Chief Financial
Officer. For one year prior to that time he was a staff Certified Public
Accountant with the public accounting firm of McElroy, Quirk and Burch, Lake
Charles, Louisiana. From 1984 to 1989 he served at different times and in
different capacities with the public accounting firms of Grant Thornton, L.L.P.,
and Deloitte & Touche, L.L.P. From 1989 to 1993, he was assistant controller of
Chemical Waste Management, Inc., a chemical waste management company. He has
been a Certified Public Accountant since 1987 and a Certified Management
Accountant since 1993.
MICHAEL A. CLARK has served as Vice President and General Manager of the
Company since 1994. His responsibilities include the day-to-day management of
the operations of the Louisiana, Alabama, Kansas and Mississippi Clusters. From
1985 to 1993 he was Director of Data Processing for the Company's landline
affiliate.
PAUL CLIFTON has been the Company's Vice President for Engineering and
Technical Services since 1994. From 1993 to 1994, he was the Company's manager
of network systems, in which capacity he was responsible for overseeing all
engineering and technical aspects of the operations of the Wireless Entities.
From 1988 to
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<PAGE> 57
1993 he was traffic manager and then traffic coordinator for the Company's
landline affiliate, by which he was first employed in 1980. In those capacities
he was responsible for design and implementation projects associated with the
operation of cellular, paging, voice mail, central office, personal computer,
cable television and long distance operations.
THOMAS G. HENNING, an attorney, has been the General Counsel of the Company
and its landline affiliate since January 1994. Prior to becoming General
Counsel, Mr. Henning had since 1984 been an associate, and since 1988 a partner,
of the law firm of Stockwell, Sievert, Viccellio, Clements & Shaddock, L.L.P.,
Lake Charles, Louisiana. He has been an officer and Director of the Company
since 1988. He also serves as an officer and director of other Wireless
Entities.
WILLIAM L. HENNING, SR. practiced law for 10 years, following which he has
for more than 40 years been an executive officer and director of the Landline
Entities. He has been a Director of the Company since its incorporation in 1967.
He has been a director of the National Rural Telecom Association (formerly known
as the National REA Telephone Association) since 1973. He was President of the
Louisiana Telephone Association in 1955; a director of the West Calcasieu Port,
Harbor and Terminal District from 1964 to 1978; a director of the Calcasieu
Parish Industrial Development Board from 1972 to 1986; a director of the United
States Telephone Association from 1982 to 1988; a director of Calcasieu Marine
National Bank from 1985 to 1996; and a commissioner of the Chenault Industrial
Airpark Authority from 1986 to 1988.
JOHN A. HENNING served, from 1987 to 1995, as President of the Wireless
Entity that operated the Louisiana Cluster. Since 1988 he has served as an
officer of various Landline Entities. He has been an officer and Director of the
Company since 1988. He was a director of the Louisiana Telephone Association
from 1984 to 1995 and served as its President from 1993 to 1995. He has served
as a director of Cameron State Bank since 1988.
William L. Henning, Jr., Thomas G. Henning and John A. Henning are
brothers. William L. Henning, Sr. is their father.
The Company has undertaken, pursuant to a resolution of the Board of
Directors, to appoint within 12 months of the consummation of this Offering and
to maintain thereafter at least one independent director (defined as a director
who (a) is not an officer or employee of the Company or any of its subsidiaries,
(b) is not related to such officers, (c) is not the beneficial owner of 10% or
more of the Common Stock of the Company or related to such an owner, and (d) in
the view of the Company's Board of Directors, is free of any relationship that
would interfere with the exercise of independent judgment) on its Board of
Directors.
The Board of Directors is divided into three classes of nearly equal size
serving three-year staggered terms each. The initial Class I directors are John
A. Henning and Thomas G. Henning, whose terms expire in 1998. The initial Class
II directors are William L. Henning, Sr. and Robert Piper, whose terms expire in
1999. The initial Class III director is William L. Henning, Jr., whose term
expires in 2000. The independent director will be elected to Class III.
The Company's Board of Directors has established an Audit Committee and a
Compensation Committee. William L. Henning, Sr. and John A. Henning are the
members of both committees. The independent director referred to in the
preceding paragraph will serve on the Audit Committee, and it is expected that
he or she will serve on the Compensation Committee. The Audit Committee
recommends the annual engagement of the Company's auditors, with whom the Audit
Committee will review the scope of audit and non-audit assignments, related
fees, the accounting principles used by the Company in financial reporting,
internal financial auditing procedures and the adequacy of the Company's
internal control procedures. The Compensation Committee determines officers'
salaries and bonuses. The Board of Directors or a committee appointed by the
Board of Directors will administer the Company's benefit plans that involve
stock or interests therein. Further, the approval of disinterested directors
will be required for any material agreements or arrangements between the Company
and directors, officers, existing principal shareholders and their affiliates.
Prior to October 1996, the Company did not have a compensation committee, and
the functions of such a committee were performed by the Board of Directors.
William L. Henning, Jr., Thomas G. Henning and Robert Piper, who are executive
officers of the Company and serve on its Board of Directors, participated in
deliberations of the Board of Directors concerning executive officer
compensation.
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<PAGE> 58
Under the Company's By-Laws, the Board of Directors may establish an
Executive Committee which, if appointed, will consist of up to five members and
will have all powers of the Board of Directors when the Board is not in session
except powers expressly reserved to other committees. A unanimous vote of the
Executive Committee would be required for that committee to authorize the
issuance and sale of any shares of capital stock or any indebtedness other than
trade indebtedness incurred in the ordinary course of the Company's business and
other than indebtedness not in excess of $1.0 million.
NO EMPLOYMENT AGREEMENTS
The Company has no employment agreements with its officers or employees,
each of whom may terminate his or her employment, or be terminated, at will.
Persons employed by the Company within the last five years have agreed to be
subject to restrictions on competing with the Company should his or her
employment with the Company terminate.
DIRECTOR COMPENSATION
Directors have not previously been paid fees for service in their capacity
as directors. The Company anticipates that, following consummation of this
Offering, it will pay director fees to, and reimburse expenses incurred in
attending meetings of the Board and its Committees to, its independent
directors.
EXECUTIVE COMPENSATION
The following table sets forth the compensation earned by the Company's
executive officers for the year ended December 31, 1995 and expected to have
been earned for the year ended December 31, 1996.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION(1)
------------------------------
BONUS
------------------- ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY CASH STOCK COMPENSATION(1)
- ----------------------------------------- ---- ------- -------- ------- ---------------
<S> <C> <C> <C> <C> <C>
William L. Henning, Jr.
Chairman & Chief Executive Officer 1995 $42,000 $ 10,850 $40,500 $ 2,326
1996 52,000 100,000 45,000 1,763
Robert Piper
President & Chief Operating Officer 1995 58,156 11,200 20,250 4,425
1996 73,608 -- 45,000 4,730
Thomas G. Henning
Secretary & General Counsel 1995 25,000 10,500 40,500 790
1996 35,000 100,000 45,000 1,049
</TABLE>
- ---------------
(1) Does not include compensation from affiliated companies.
1997 STOCK OPTION PLAN
The Board of Directors of the Company has adopted, and the shareholders of
the Company have approved, the US Unwired Inc. 1997 Stock Option Plan (the
"Stock Option Plan"). Under the Stock Option Plan, stock options and other
equity-based awards may be granted to directors, officers, management and other
selected employees and consultants of the Company and its subsidiaries. The
Stock Option Plan will be administered by the Board of Directors or a committee
appointed by the Board of Directors and consisting solely of two or more
"non-employee directors" (the "Administrator").
The Board of Directors expects to grant, upon consummation of this
Offering, five year options to purchase up to approximately 270,000 shares of
Class A Common Stock to certain executive officers, employees and consultants of
the Company pursuant to the Stock Option Plan. The exercise price of each option
granted will be the initial public offering price per share of the Class A
Common Stock offered hereby. Such options will vest in equal 25% annual
installments over a four-year period.
The Administrator, which may grant stock options, stock appreciation rights
and other stock-based awards to eligible persons. In no event, however, may the
Administrator grant awards relating to more than 1,400,000 shares of Class A
Common Stock pursuant to the Stock Option Plan. Shares subject to awards that
are cancelled, forfeited or otherwise settled without the delivery of shares,
and shares surrendered to or
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<PAGE> 59
withheld by the Company in satisfaction of the exercise price or withholding tax
arising in connection with the exercise of an award, shall be added back to the
total number of shares in respect of which awards may be granted under the Stock
Option Plan.
Awards may be satisfied by the delivery of either authorized but unissued
Class A Common Stock or treasury shares. The Administrator may grant one or more
types of awards in any combination to a particular participant in a particular
year; however, no individual may be granted awards under the Stock Option Plan
relating to more than 140,000 shares. No awards may be made under the Stock
Option Plan after the tenth anniversary of the effective date of the Stock
Option Plan, and no shares may be issued under the Stock Option Plan after that
date, except in respect of awards made prior to that date. Each award will be
confirmed by, and is subject to the terms of, an agreement executed by the
participant and the Company.
Following is a description of each type of award or grant that may be made
under the Stock Option Plan.
STOCK OPTIONS
Stock options may be incentive stock options that comply with the
requirements of Section 422 of the Internal Revenue Code of 1986, as amended
(the "Code") or nonqualified stock options that do not comply with Section 422
of the Code. The Administrator will determine the exercise price and other terms
and conditions of options, subject to the limitation that the exercise price of
options may not be less than fair market value of the underlying shares on the
date of grant.
To the extent permitted by the Administrator, the exercise price for an
option may be paid in shares of Class A Common Stock valued at their then fair
market value.
STOCK APPRECIATION RIGHTS
Stock appreciation rights ("SARs") may be granted in conjunction with all
or any part of a stock option or independently. Upon the exercise of an SAR, the
participant will be entitled to receive, for each share of Class A Common Stock
to which the exercised SAR relates, the excess of the fair market value per
share of Class A Common Stock on the date of exercise over the grant price of
the SAR. SARs shall have such terms and conditions as may be established by the
Administrator.
OTHER STOCK-BASED AWARDS
The Administrator has the authority under the Stock Option Plan to make
other awards that are valued in whole or in part by reference to, or are payable
in or otherwise based upon, shares of Class A Common Stock, including awards
valued by reference to the performance of a subsidiary of the Company. The
Administrator will determine the participants to whom and the times at which
these awards will be made, the number of shares of Class A Common Stock to be
awarded and all other terms and conditions of the awards.
Any award granted under the Stock Option Plan may include the right to
receive, either currently or on a deferred basis, dividends or dividend
equivalents with respect to the number of shares covered by the award.
If the Administrator determines that any stock split, stock dividend or
other distribution (whether in the form of cash, securities or other property),
recapitalization, reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase or exchange of shares, issuance of warrants or other
rights to purchase shares at a price below fair market value, or other similar
corporate event affects the Class A Common Stock such that an adjustment is
required in order to preserve the benefits intended under the Stock Option Plan,
then the Administrator may in its discretion (i) make equitable adjustments (a)
in the number and kind of shares that may be the subject of future awards under
the Stock Option Plan or (b) the number and kind of shares (or other securities
or property) subject to outstanding awards and the respective grant or exercise
thereof and (ii) if appropriate, provide for the payment of cash to a
participant.
The Stock Option Plan may be amended or terminated at any time by the Board
of Directors, except that no amendment may be made without shareholder approval
if such approval is necessary to comply with any tax or regulatory requirement.
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<PAGE> 60
The Stock Option Plan is not subject to any provision of ERISA and is not
qualified under Section 401(a) of the Code.
PRINCIPAL SHAREHOLDERS
The following table provides certain information regarding the beneficial
ownership of the Company's Common Stock upon the consummation of this Offering
by (i) each of the Company's directors and officers listed in the summary
compensation table, (ii) all directors and officers as a group and (iii) each
person known to the Company to be the beneficial owner of 5% or more of any
class of the Company's voting securities.
<TABLE>
<CAPTION>
CLASS A AND CLASS B COMMON
STOCK(1)
CLASS A CLASS B --------------------------
COMMON STOCK(1) COMMON STOCK(1) PERCENTAGE
-------------------- ----------------------- PERCENTAGE OF COMBINED
PERCENTAGE PERCENTAGE OF COMBINED VOTING
NAME OF BENEFICIAL OWNER SHARES OF CLASS SHARES OF CLASS CLASSES POWER
- ----------------------------------- ------ ---------- --------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
William L. Henning, Sr. ........... -- -- 4,613,011(2) 41.0% 35.6% 40.4%
William L. Henning, Jr. ........... -- -- 1,043,988(3) 9.3 8.1 9.1
John A. Henning.................... -- -- 994,058(3) 8.8 7.7 8.7
Thomas G. Henning.................. -- -- 1,343,561(4) 11.9 10.4 11.8
Thomas D. Henning.................. -- -- 779,596 6.9 6.0 6.8
Robert Piper....................... -- -- 33,286(5) 0.3 0.3 0.3
All officers and directors as a
group (8 persons total, 5 with
ownership interests)............. -- -- 8,027,904 71.4 62.0 70.3
</TABLE>
- ---------------
(1) As used in this table "beneficial ownership" means the sole or shared power
to vote or direct the voting or to dispose or direct the disposition of any
security. A person is deemed as of any date to have "beneficial ownership"
of any security that such person has a right to acquire within 60 days after
such date, except that shares of Class A Common Stock issuable upon
conversion of Class B Common Stock (see "Description of Capital Stock") are
shown only as Class B Common Stock beneficially owned and not also as Class
A Common Stock beneficially owned. Any security that any person named above
has the right to acquire within 60 days (other than Class A Common Stock
issuable upon conversion of Class B Common Stock) is deemed to be
outstanding for purposes of calculating the ownership percentage of any
other person.
(2) Includes the community property interest of Mrs. Henning. Also includes Mr.
Henning's proportionate interest in 33,286 shares held by a general
partnership comprised of Mr. and Mrs. William L. Henning, Sr., William L.
Henning, Jr., John A. Henning and Thomas G. Henning, based on his interest
in that partnership.
(3) Excludes 116,501 shares held in each of two trusts for the benefit of the
minor children of William L. Henning Jr. and John A. Henning, respectively,
of which shares each of them disclaims beneficial ownership. Includes each
of William L. Henning, Jr.'s and John A. Henning's proportionate interest in
33,286 shares held by a general partnership comprised of Mr. and Mrs.
William L. Henning, Sr., William L. Henning, Jr., John A. Henning and Thomas
G. Henning, based on each of their respective interests in that partnership.
(4) Includes 233,002 shares held by Mr. Henning as trustee for the minor
children of William L. Henning, Jr. and John A. Henning (see Note (3)
above), and 116,501 shares held by Mr. Henning as trustee for his own minor
children, of all of which shares he disclaims beneficial ownership. Also
includes Mr. Henning's proportionate interest in 33,286 shares held by a
general partnership comprised of Mr. and Mrs. William L. Henning, Sr.,
William L. Henning, Jr., John A. Henning and Thomas G. Henning, based on his
interest in that partnership.
(5) Includes the community property interest of Dr. Eileen Piper, the spouse of
Robert Piper.
CERTAIN TRANSACTIONS
TAX-FREE RESTRUCTURING
In preparation for this Offering, the Company and its affiliate through
common control, Cameron Communications Corporation ("Cameron"), completed a
restructuring plan pursuant to which the wireless communications interests of
Cameron were separated from its landline telephone business and combined with
the wireless communications interests of the Company (the "Tax-Free
Restructuring"). To accomplish this restructuring, on September 19, 1996
Cameron, the Company, MCTC (of which Cameron then owned 96%, and the Company
then owned 4%), Mercury Cellular of Kansas, Inc. (then a wholly-owned subsidiary
of
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MCTC), Mississippi One Cellular Telephone Company (a wholly-owned subsidiary of
the Company), Cameron Telephone Company (then a wholly-owned subsidiary of
Cameron), Elizabeth Telephone Company (a 98% subsidiary of Cameron Telephone
Company), and CCC Holding Company ("Newco," then a wholly-owned subsidiary of
Cameron formed to facilitate the restructuring) entered into an Agreement and
Plan of Reorganization (the "Reorganization Agreement"). Pursuant to the
Reorganization Agreement, the following transactions occurred on October 31,
1996. Cameron transferred to Newco all of Cameron's assets and liabilities,
other than its 96% interest in MCTC. Next, Cameron "spun off" (transferred), as
a distribution to its shareholders, all of the shares of Newco. Then, Cameron
was merged into the Company. In consideration for this merger, shareholders of
Cameron received, in exchange for their shares of Cameron, shares of common
stock of the Company which, together with all other then outstanding shares,
have been reclassified into Class B Common Stock. Following the restructuring,
the name of Newco was changed to "Cameron Communications Corporation," and the
name of the Company, which had been Mercury, Inc., was changed to "US Unwired
Inc."
The Reorganization Agreement further provides for the allocation of
obligations and liabilities between Newco and the Company. In general, Newco
will be responsible for all obligations and liabilities relating to the landline
communications business and the Company will be responsible for those relating
to the wireless communications business. Liabilities of a corporate nature, such
as indemnification of officers and directors and securities law liabilities
relating to the issuance of securities in connection with the restructuring, are
allocated to Newco if the liability is attributable to Cameron as it existed
prior to the restructuring, and otherwise to the Company. If an obligation or
liability that is to be allocated to Newco or the Company is asserted against
the other of them, the one to which the obligation or liability was allocated by
the Reorganization Agreement will defend and indemnify the one against which it
is asserted.
Prior to the restructuring, Cameron received from the Internal Revenue
Service a private letter ruling to the effect that no gain or loss would be
recognized by Cameron or its shareholders by virtue of the transfer of assets to
Newco or the spin-off of Newco to Cameron's shareholders, because those
transactions would qualify as a reorganization under Section 368(a)(1)(D) of the
Code and a distribution under Section 355 of the Code. In addition, tax counsel
for the Company had informed it that the merger of Cameron into the Company
would qualify as a reorganization under Section 368(a)(1)(A) of the Code so that
no gain or loss would be recognized by the respective corporations or their
shareholders by virtue of that merger.
AFFILIATE TRANSACTIONS
GENERAL
During a period of many years prior to the restructuring described in the
preceding section, the Company, Cameron and their respective subsidiaries
entered into a variety of contractual relationships with one another and with
other companies under common control. Certain current transactions are
summarized below. There have been additional transactions which have included
cost sharing arrangements among the companies and their affiliates, sharing of
services and salary expenses of personnel, including officers of the companies,
and inter-company sales of assets, including transfers of the assets of a local
long distance company that was subsequently sold by the Company to a third
party.
BILL PROCESSING SERVICES
In 1995, Cameron entered into agreements with MCTC, Cameron Telephone
Company, Elizabeth Telephone Company, Mississippi One Cellular Telephone
Company, Mercury Cellular of Kansas, Inc. and Mississippi 34 Cellular
Corporation, all of which were then subsidiaries of it and/or the Company, under
which Cameron performs bill processing and related services for each of those
corporations. Each agreement had an initial term of six months and is now
subject to termination by either party on 30 days' notice. Prior to the
execution of these agreements, Cameron provided comparable services under oral
agreements. The aggregate amounts paid to Cameron by subsidiaries engaged in the
wireless communications business for all such services during the years ended
December 31, 1993, 1994 and 1995 were $553,000, $635,000 and $1.1 million,
respectively, and $1.3 million for the nine-month period ended September 30,
1996.
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Upon consummation of the restructuring transactions described above, Newco
succeeded to the interest of Cameron in these agreements. The Company believes
that the terms of these agreements are no less favorable to it than terms that
would be available from unaffiliated third persons.
SYSTEM MANAGEMENT AND CONSTRUCTION SERVICES
On May 1, 1996, the Company entered into agreements with MCTC and Mercury
Cellular of Kansas, Inc. (then subsidiaries of Cameron and now, because of the
restructuring, wholly-owned subsidiaries of the Company) under which the Company
provides construction and management services for the respective systems owned
by those corporations. Such services include reviewing and, if necessary,
modifying system design; obtaining governmental and regulatory approvals;
preparation of control point, base station and business office sites; purchase
and installation of switching and base station equipment; negotiating
interconnection to the local exchange switched telephone network; and general
management of the operations of the system. In return for these services, each
of the corporations pays the Company a management fee and reimburses it for all
of its expenses. The management fees used by the two corporations under the
agreements have been $216,000 per month and $42,000 per month. Prior to these
agreements being entered into, the Company provided comparable services for the
corporations under oral arrangements. The aggregate amounts paid to the Company
for such services, including expense reimbursements, during the years ended
December 31, 1993, 1994 and 1995, respectively, were $1.4 million, $1.7 million
and $3.3 million. These amounts have been eliminated in the consolidated
financial statements of the Company.
LONG DISTANCE SERVICES
The Company purchases long distance service from Cameron and resells the
service to the Company's customers. The rates paid by the Company for this
service are comparable to rates at similar volumes charged by Cameron to other
customers and are competitive with rates that the Company would expect to pay
for similar service from an unaffiliated third party. In the years ending
December 31, 1993, 1994 and 1995, the Company paid Cameron $225,000, $228,000
and $386,000, respectively. For the nine months ended September 30, 1996, the
Company paid Cameron $495,000 for long distance service.
FLIGHT SERVICES
The Company has been and is expected to continue to be permitted to use,
for the rate of $2.75 per air mile, a Mitsubishi Diamond 1A aircraft owned and
operated by Cameron. In the years ended December 31, 1993, 1994 and 1995, the
Company paid Cameron $21,000, $23,000 and $85,000, respectively, for flight
services. It is believed that the rates paid for these services are rates that
the Company would be required to pay to an unaffiliated third party for
equivalent services. For the nine months ended September 30, 1996, the Company
paid Cameron $56,000 for such flight services.
MISCELLANEOUS EXPENSE ARRANGEMENTS
The Company and Cameron have historically used certain common vendors and
suppliers to provide various materials and routine services, such as office
supplies, advertising, computer programming and maintenance services. Each of
the Company, Cameron and their subsidiaries bears its proportionate share of
such expenses.
LOAN FROM CAMERON SUBSIDIARY
The Company's acquisition of the Mississippi and Alabama Clusters has been
financed by a direct loan from Cameron Telephone Company, a subsidiary of
Cameron, and a series of pass-through financings from CoBank through CTC
Financial, Inc., a subsidiary of Cameron Telephone Company, to the Company and
its subsidiaries, MCTC and Mississippi One Cellular Telephone Company. On
November 27, 1996, the Company repaid the direct loan from Cameron Telephone
Company with proceeds from an amendment of the pass-through financing.
Thereafter, CTC Financial, Inc. assigned its interest in the pass-through
financings to Mercury Cellular of Kansas, Inc., a subsidiary of the Company. As
of November 30, 1996 the pass-through
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financings were in an aggregate principal amount of $67.7 million. These loans
are represented by a series of promissory notes executed between September 1994
and July 1996. The notes were executed in stages as funds were required for the
acquisition and build-out of the Company's cellular telephone properties. The
notes bear rates of interest ranging from 8.12% to 10.11% and mature at
different times between December 31, 1996 and December 20, 2003. The notes are
governed by the terms of loan agreements to which the Company, Mississippi One
Cellular Telephone Company, MCTC and Mercury Cellular of Kansas are parties and
which provide, generally as to the bulk of the borrowings, that the Company will
pay interest, only, for a period of up to two years and will thereafter pay
principal and interest in monthly installments for a fixed term. The loans are
secured by mortgages of the Company's Kansas, Alabama and Mississippi real
property, the grant of a security interest in the Company's personal property
and continuing guarantees of the Company. All of these loans are secured by
pledges of or mortgages on the assets of the Company and its subsidiaries and
guarantees of the Company and William L. Henning, Sr., a principal shareholder
of the Company. After this Offering, the Company intends to consolidate the
loans from CoBank to the Company and its subsidiaries.
MANAGEMENT AND OTHER SERVICES
William L. Henning, Jr., the Company's Chairman of the Board and Chief
Executive Officer and a principal shareholder of the Company; John A. Henning, a
Director and a principal shareholder of the Company; and Thomas G. Henning, the
Secretary and General Counsel and a principal shareholder of the Company, own
equal interests in MIT, which has, since January 1, 1996, paid the Company a
monthly fee of $2,300 for certain accounting services and a monthly fee of
$3,218 for certain management services. In 1994, in connection with the
Company's decision to focus on its wireless communication services, the Company
sold its voicemail operations and assets to MIT for $424,497. MIT provides the
Company with voicemail services which the Company uses itself and also resells
to its cellular subscribers. During the nine months ended September 30, 1996,
the Company has paid MIT $216,000 for such services and paid MIT $154,000 for
such services during the year ended December 31, 1995. Pursuant to an agreement
dated October 27, 1995, the Company retains 15% of the revenues from customer
voicemail services to the Company in exchange for the Company providing MIT with
billing, collecting, advertising and network services associated with the
voicemail services offered by MIT. Before October 27, the terms of the October
27, 1995 agreement were implemented pursuant to an oral agreement between the
Company and MIT. The Company believes that the terms of these arrangements are
no less fair to the Company than would be expected in comparable arrangements
with unaffiliated third persons. However, since the exchange of services between
the Company and MIT provides each with substantial information about the
business operations of the other, it is unlikely that the Company would be
willing to enter into such arrangements with unaffiliated third persons. Under
an agreement dated June 6, 1996, with Maas.net, LLC, a limited liability company
that is owned 63% by MIT and 27% by Mr. Henning, Jr., the Company pays Maas.net
$2,000 per month for certain Internet services.
PCS PARTNERSHIP
MIT owns a one-third interest in Wireless Management Corporation, the
corporation that serves as general partner of the PCS Partnership. For
information concerning the partnership agreement, see
"Business -- Organization."
MOBILITY
The Company and Cameron each own 50% of Mobility. The Company has been
designated as the manager of Mobility and is currently negotiating with Cameron
the terms under which the Company will manage the design, construction and daily
operations of Mobility's PCS Systems.
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 100,000,000 shares
of Class A Common Stock, par value $.01 per share; 60,000,000 shares of Class B
Common Stock, par value $.01 per share; and 40,000,000 shares of preferred
stock, no par value (the "Preferred Stock"). Immediately prior to the
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Company's issuance of Class A Common Stock pursuant to this Offering, there were
11,250,000 shares of Class B Common Stock and no shares of Class A Common Stock
or Preferred Stock issued and outstanding and the Company had approximately 16
holders of record of its Class B Common Stock.
COMMON STOCK
The Company has two classes of authorized Common Stock, Class A Common
Stock and Class B Common Stock. Other than as described herein with respect to
voting rights and transfer restrictions applicable to the Class B shares, the
Class A and Class B shares have identical rights. The Class A Common Stock has
one vote per share and the Class B Common Stock has 10 votes per share. The
Class A and Class B shares vote together in the election of Directors and
generally with respect to all matters for which a vote of shareholders is
required.
Shares of Class B Common Stock generally convert automatically into shares
of Class A Common Stock on a share-for-share basis immediately upon any transfer
of the Class B Common Stock other than a transfer from an original holder of
Class B Common Stock to certain "qualified holders," who are other original
holders of Class B Common Stock, descendants of such persons, entities owned
exclusively by any of such persons, or trustees or other fiduciaries for any of
them. Holders of Class B Common Stock are subject to certain transfer
restrictions that are described under the heading "Shares Eligible for Future
Sale," including a requirement that Class B shares be first offered to other
Class B shareholders before any transfer can be made to anyone other than a
"qualified holder" and before any related conversion into Class A Common Stock.
Such restrictions do not apply to the Class A Common Stock.
Holders of Common Stock have no cumulative voting rights and no preemptive,
subscription or sinking fund rights. Subject to preferences that may be
applicable to any then outstanding Preferred Stock, holders of Common Stock will
be entitled to receive ratably such dividends as may be declared by the Board of
Directors out of funds legally available therefore. See "Dividend Policy." In
the event of a liquidation, dissolution or winding up of the Company, holders of
Common Stock will be entitled to share ratably in all assets remaining after
payment of liabilities and the liquidation preference to any then outstanding
Preferred Stock.
PREFERRED STOCK
The Company is authorized under its Articles of Incorporation to issue
40,000,000 shares of Preferred Stock, which may be issued from time to time in
one or more series upon authorization by the Company's Board of Directors. The
Board of Directors, without further approval of the shareholders, is authorized
to fix the dividend rights and terms, conversion rights, voting rights,
redemption rights and terms, liquidation preferences and any other rights,
preferences, privileges and restrictions applicable to each series of Preferred
Stock. The issuance of Preferred Stock, while providing flexibility in
connection with possible acquisitions and other corporate purposes, could, among
other things, adversely affect the voting power of the holders of Common Stock
and, under certain circumstances, make it more difficult for a third party to
gain control of the Company, discourage bids for the Company's Common Stock at a
premium or otherwise adversely affect the market price of the Class A Common
Stock. The Company has no current plans to issue any Preferred Stock.
SHAREHOLDER AGREEMENT
In December 1996 the Company entered into an agreement with William L.
Henning, Sr., Lena B. Henning, William L. Henning, Jr., John A. Henning, Thomas
G. Henning, Hansen Evans Scobee, Renee Scobee, Marie Scobee Williams, Henry Rice
Scobee, Robert Piper, Thomas G. Henning, as trustee of the William L. Henning,
Jr. Exempt Class Trust No. 1, U/A 9-20-96, Thomas G. Henning, as trustee of the
John A. Henning Exempt Class Trust No. 1 U/A 9/20/96 and Thomas G. Henning, as
trustee of the Thomas G. Henning Exempt Class Trust No. 1 U/A 9/20/96, all of
whom are holders of Class B Common Stock. The agreement provides, among other
things, that the signatory shareholders agree to vote in favor of adoption of
the Articles of Incorporation and that they will not approve any amendment to
the Articles of Incorporation that restricts the transfer of Class B Common
Stock beyond the restrictions contained in the Articles of Incorporation. The
agreement also provides that the signatory shareholders will agree to vote in
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favor of the waiver of the timing and volume restrictions on the sale of shares
of Class A Common Stock issued upon conversion of Class B Common Stock contained
in the Articles of Incorporation (i) upon notice within 90 days by any
shareholder that those restrictions have been waived for any other holder of
Class B Common Stock and (ii) for the estate of any of the signatory
shareholders under certain conditions. The agreement also contains piggyback
registration rights in favor of the signatory shareholders. See "Share Eligible
for Future Sale." The registration rights terminate six years after the date of
the agreement, and the other provisions terminate 25 years after the date of the
agreement, unless otherwise extended pursuant to the terms of the agreement.
CERTAIN CHARTER, BY-LAW AND STATUTORY PROVISIONS
The following sections describe certain provisions of the Company's
Articles of Incorporation and By-Laws, and of the Louisiana Business Corporation
Law ("LBCL").
CLASSIFIED BOARD OF DIRECTORS
The Articles of Incorporation divide the members of the Board of Directors
into three classes as nearly equal in size as possible serving three-year
staggered terms each. The initial Class I directors are John A. Henning and
Thomas G. Henning, whose terms expire in 1998. The initial Class II directors
are William L. Henning, Sr. and Robert Piper, whose terms expire in 1999. The
initial Class III director is William L. Henning, Jr., whose term expires in
2000. The independent director will be appointed to Class III.
SPECIAL MEETINGS OF SHAREHOLDERS
The Articles of Incorporation and By-Laws provide that meetings of the
shareholders of the Company may be called upon written request of any
shareholder or shareholders holding in the aggregate 60% of the total voting
power of the Company. In addition, a special meeting of shareholders of any
class or series may be called upon written request of any shareholder or group
of shareholders holding in the aggregate 60% of the total voting power of such
class or series.
ADVANCE NOTICE REQUIREMENTS FOR DIRECTOR NOMINATIONS
The Company's By-Laws provide that nominations of persons for election to
the Board of Directors of the Company may be made at a meeting of shareholders
by or at the direction of the Board of Directors or by any shareholder of record
of the Company entitled to vote for the election of directors at the meeting who
complies with the notice procedures set forth in the By-Laws. Such nominations,
other than those made by or at the direction of the Board of Directors, shall be
made pursuant to timely notice in writing to the Secretary of the Company. To be
timely, a shareholder's notice must be delivered or mailed and received at the
principal office of the Company not less than 45 days nor more than 90 days
prior to the meeting, provided, however, that in the event that less than 55
days' notice or prior public disclosure of the date of the meeting is given or
made to shareholders, notice by the shareholder to be timely must be received no
later than the close of business on the tenth day following the day on which
such notice of the date of the meeting was mailed or such public disclosure was
made.
DIRECTOR AND OFFICER INDEMNIFICATION AND LIMITATION OF LIABILITY
As permitted by the LBCL, the Company's Articles of Incorporation contain
provisions eliminating the personal liability of directors and officers to the
Company and its shareholders for monetary damages for breaches of their
fiduciary duties as directors or officers, except for (i) a breach of a
director's or officer's duty of loyalty to the Company or its shareholders, (ii)
acts or omissions not in good faith or that involve intentional misconduct or a
knowing violation of law, (iii) liability for unlawful distributions of the
Company's assets to, or redemptions or repurchases of the Company's shares from,
shareholders of the Company, under and to the extent provided in the LBCL, and
(iv) any transaction in which a director or officer receives an improper
personal benefit. As a result of the inclusion of such provisions, shareholders
may be unable to recover monetary damages against directors or officers for
actions taken by them that constitute negligence or
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gross negligence or that are in violation of their fiduciary duties, although it
may still be possible to obtain injunctive or other equitable relief with
respect to such actions. If equitable remedies are found not to be available to
shareholders in any particular case, shareholders may not have any effective
remedy against the challenged conduct.
The Company's Articles of Incorporation and By-Laws provide in effect that
the Company shall, to the fullest extent permitted by the LBCL, as amended from
time to time, indemnify and advance expenses to each of its directors and
officers, and may so indemnify and advance expenses to employees and agents.
The Company believes the foregoing provisions are necessary to attract and
retain qualified persons as directors and officers. Prior to the consummation of
this Offering, the Company intends to enter into separate indemnification
agreements with each of its directors and executive officers in order to
effectuate such provisions.
REDEMPTION OF CAPITAL STOCK
The Company's Articles of Incorporation permit it to redeem shares of its
capital stock from any shareholder(s) whose ownership causes the Company to
violate foreign ownership restrictions applicable to FCC licensees (see
"Business -- Governmental Regulation -- Foreign Ownership") or otherwise would
prevent the Company from holding or delay it in obtaining any governmental
license or franchise that is necessary to conduct any material portion of its
communications business or would materially increase the Company's cost of
obtaining or operating under any such license or franchise. Shares to be
redeemed are to be selected in a manner determined by the Board of Directors.
The redemption price is the average market price for the 10 trading days
preceding the day on which notice of redemption is given. The redemption price
may be paid in cash or in debt or equity securities of the Company or any other
entity.
REMOVAL OF DIRECTORS; FILLING VACANCIES ON BOARD OF DIRECTORS
The Articles of Incorporation provide that any director elected by holders
of the Common Stock may be removed, with or without cause, by a vote of a
majority of the total voting power of the Common Stock at any meeting of
shareholders. The Articles of Incorporation provide that any vacancies on the
Board of Directors (including any resulting from an increase in the authorized
number of directors) may be filled by the affirmative vote of a majority of the
directors remaining in office, provided that the shareholders have the right, at
any special meeting called for that purpose prior to such action by the Board,
to fill the vacancy.
ADOPTION AND AMENDMENT OF BY-LAWS
The Articles of Incorporation and By-Laws provide that the By-Laws may be
adopted, amended, or repealed by a majority vote of the Board of Directors,
subject to any power granted by the LBCL to shareholders to change or repeal any
By-Laws so adopted or amended. Any amendment to the By-Laws that would add a
matter not expressly covered in the By-Laws prior to such amendment will be
deemed the adoption of a new By-Law and not an amendment.
SPECIAL SHAREHOLDER VOTING REQUIREMENTS
The Articles of Incorporation provide that any proposal to approve a
merger, consolidation, share exchange, disposition of all or substantially all
of the Company's assets, dissolution, or any amendment to the Articles of
Incorporation, requires the affirmative vote of a majority of the total voting
power, with all classes and series voting together as if a single class,
provided that the Board of Directors has previously approved and/or recommended
such proposal by the affirmative vote of three-fourths of the number of
Directors constituting the full Board of Directors. Otherwise, the affirmative
vote of holders of at least two-thirds of the total voting power, with all
classes and series voting together as if a single class, is required to approve
such a proposal. The LBCL provides that if a proposed amendment to the Articles
of Incorporation would adversely affect, within the meaning of the LBCL, the
shares of any class of capital stock, then the amendment must also be approved
by holders of the shares of that class. Under the Company's Articles of
Incorporation, such approval would require the affirmative vote of holders of a
majority of the voting power present of that class.
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TRANSFER AGENT
The Company's transfer agent for its Class A Common Stock is First Chicago
Trust Company of New York.
SHARES ELIGIBLE FOR FUTURE SALE
Prior to this Offering, there has been no market for the Class A Common
Stock of the Company. Future sales of substantial amounts of Class A Common
Stock in the public market could adversely affect prevailing market prices.
Upon the closing of this Offering, the Company will have 12,950,000 shares
of Common Stock outstanding (13,205,000 shares if the Underwriters'
over-allotment option is exercised in full), of which 1,700,000 shares will be
shares of Class A Common Stock sold in this Offering (1,955,000 shares if the
Underwriters' over-allotment option is exercised in full), and 11,250,000 shares
will be shares of Class B Common Stock. Of these shares, the 1,700,000 shares of
Class A Common Stock sold in this Offering (1,955,000 shares if the
Underwriters' over-allotment option is exercised in full) will be freely
tradeable without restriction (except as to affiliates of the Company) and the
11,250,000 outstanding shares of Class B Common Stock will be "restricted
securities" as defined in Rule 144 under the Securities Act. Without
consideration of the restrictions described below, 3,861,184 of the restricted
shares would be available for immediate sale in the public market 91 days after
the date of this Prospectus, subject to volume and other limitations under Rule
144; and on February 14, 1997 and February 19, 1998, 116,501 shares and 66,572
shares will become eligible, respectively. In addition, subject to certain
restrictions set forth in the Company's Articles of Incorporation described
below, on October 31, 1998, when the holding period imposed by the Internal
Revenue Service as a condition to the Tax-Free Restructuring expires, 7,588,532
shares will become eligible for sale without restriction in the public market.
The Rule 144 restrictions generally terminate, except as to affiliates of the
Company, three years after the securities are acquired from the Company or any
affiliate of the Company. The Commission is considering certain amendments to
Rule 144 that, if adopted, would shorten by one year each of the time periods
referred to in the three preceding sentences, except that no such date would be
earlier than the 91st day after the date of this Prospectus.
All of the officers, directors and shareholders of the Company who hold in
the aggregate 11,250,000 of the Class B shares have agreed, subject to certain
limitations, that for a period of 180 days after the date of this Prospectus
they will not, without the prior written consent of The Robinson-Humphrey
Company, Inc. on behalf of the Underwriters, offer, sell, contract to sell,
grant any option to purchase, or otherwise dispose of any Common Stock or any
securities convertible into or exercisable or exchangeable for Common Stock or
in any other manner transfer all or a portion of the economic consequences
associated with the ownership of Common Stock. If and to the extent The
Robinson-Humphrey Company, Inc. should release such shares earlier, they would
be available for immediate sale in the public market subject to restrictions
contained in the Company's Articles of Incorporation and applicable to shares of
Class B Common Stock. Under these restrictions, a holder of Class B Common Stock
who desires to sell them in the public market must first offer them at a price
determined pursuant to a formula based on the public market price to all other
holders of Class B Common Stock and to the Company and, to any extent to which
the shares are not thereby purchased, may convert them to Class A Common Stock
for sale in the public market. The offering shareholder may withdraw the offer
under certain circumstances, depending on changes in the market price. The
Articles of Incorporation further provide, however, that no holder may sell such
converted shares in the public market if such sale would cause the number of
such shares that have been sold in the public market by such holder and such
holder's affiliates (and any other holder(s) acting in concert with them) during
the three-month period ending on the date of such sale to exceed 1% of the total
number of shares of Class A Common Stock outstanding on such date. This
limitation may be waived by holders of a majority of the Class B Common Stock,
and such holders have agreed to grant a waiver for sales made for the purpose of
paying estate and similar taxes of a deceased shareholder. In addition, the
Company has agreed with the holders of Class B Common Stock, subject to certain
limitations, to provide piggyback registration rights for holders of Class B
Common Stock.
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The Company has also agreed that, without the prior written consent of The
Robinson-Humphrey Company, Inc. on behalf of the Underwriters, it will not
offer, sell, contract to sell or otherwise dispose of any shares of Common Stock
or any securities convertible into or exercisable or exchangeable for Common
Stock, for a period of 180 days after the date of this Prospectus, subject to
certain limited exceptions. See "Underwriting." The Company intends to file a
registration statement covering the sale of shares of Class A Common Stock
available for issuance upon exercise of options under the 1997 Stock Option Plan
within 180 days after the date of this Prospectus.
In general, under Rule 144 as currently in effect, if two years have
elapsed since the later of the date of acquisition of restricted shares from the
Company or any "affiliate" of the Company, as that term is defined under the
Securities Act, the acquiror or subsequent holder thereof is entitled to sell
within any three-month period a number of shares that does not exceed the
greater of 1% of the then outstanding shares of the Company's Class A Common
Stock (such 1% would be 17,000 shares immediately after this Offering or 19,550
shares if the Underwriter's over-allotment option is exercised in full) or the
average weekly trading volume of the Company's Common Stock on all exchanges
and/or reported through the automated quotation system of a registered
securities association during the four calendar weeks preceding the date of
which notice of the sale is filed with the Commission. Sales under Rule 144 are
also subject to certain manner of sales provisions, notice requirements and the
availability of current public information about the Company. If three years
have elapsed since the later of the date of acquisition of restricted shares
from the Company or from any affiliate of the Company, and the acquiror or
subsequent holder thereof is deemed not to have been an affiliate of the Company
at any time during the 90 days preceding a sale, such person would be entitled
to sell such shares in the public market under Rule 144(k) without regard to the
volume limitations, manner of sales provisions, public information requirements
or notice requirements.
UNDERWRITING
Subject to the terms and conditions contained in the Underwriting Agreement
(the "Underwriting Agreement"), the Underwriters named below (the
"Underwriters"), for whom The Robinson-Humphrey Company, Inc. and A.G. Edwards &
Sons, Inc. are acting as representatives (the "Representatives"), have severally
agreed to purchase from the Company the respective number of shares of Class A
Common Stock set forth in the table below:
<TABLE>
<CAPTION>
NUMBER
UNDERWRITERS OF SHARES
-------------------------------------------------------------------------- ---------
<S> <C>
The Robinson-Humphrey Company, Inc. ......................................
A.G. Edwards & Sons, Inc. ................................................
---------
Total........................................................... 1,700,000
=========
</TABLE>
The Underwriting Agreement provides that the obligations of the several
Underwriters to purchase and accept delivery of the shares of Class A Common
Stock offered hereby are subject to approval of certain legal matters by counsel
and to certain other conditions. If any shares of Class A Common Stock are
purchased by the Underwriters pursuant to the Underwriting Agreement, all such
shares (other than shares covered by the over-allotment option described below)
must be purchased.
The Representatives have advised the Company that the Underwriters propose
to offer the shares of Class A Common Stock to the public initially at the price
to the public set forth on the cover page of this Prospectus and to certain
dealers (who may include the Underwriters) at such price less a concession not
to exceed $ per share. The Underwriters may allow, and such dealers may
reallow, discounts not in excess of
66
<PAGE> 69
$ per share to any other Underwriter and certain other dealers. After this
Offering, the offering price and other selling terms may be changed by the
Representatives.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act, or to contribute to
payments that the Underwriters may be required to make in respect thereof.
The Company has granted the Underwriters an option to purchase up to an
aggregate of 255,000 additional shares of Class A Common Stock, at the public
offering price net of the underwriting discount, solely to cover
over-allotments. Such option may be exercised at any time within 30 days after
the date of this Prospectus. To the extent that the Underwriters exercise such
option, each of the Underwriters will be committed, subject to certain
conditions, to purchase a number of option shares proportionate to such
Underwriter's initial commitment as indicated in the preceding table.
The Company, all of the current officers and directors and certain
shareholders of the Company have agreed, subject to certain limited exceptions,
not to offer, sell, contract to sell, grant any option to purchase, or otherwise
dispose of any Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock or in any other manner transfer all or a portion
of the economic consequences associated with the ownership of Common Stock for a
period of 180 days after the date of this Prospectus, without the prior written
consent of The Robinson-Humphrey Company, Inc. on behalf of the Underwriters.
Up to an aggregate of 85,000 shares of Class A Common Stock, or
approximately 5% of the shares offered hereby, have been reserved for sale to
certain employees of the Company and its affiliates and other persons designated
by the Company. The price per share of the shares to be sold to these persons is
the same as the price to the public in this Offering. The maximum investment of
any such person may be limited by the Company in its sole discretion. This
program will be administered by The Robinson-Humphrey Company, Inc. The
Underwriters do not intend to confirm sales of the Class A Common Stock offered
hereby to any accounts over which they exercise discretionary authority.
Prior to this Offering, there has been no public market for the Class A
Common Stock. The initial public offering price will be determined by
negotiations among the Company and the Representatives. Among the factors to be
considered in such negotiations will be the history of, and the prospects for,
the Company and the industry in which it competes, an assessment of the
Company's management, the Company's past and present operations, its past and
present income and the trend of such income, the prospects for future income of
the Company, the present state of the Company's development, the general
condition of the securities markets at the time of this Offering and the market
prices of publicly traded common stocks of comparable companies in recent
periods.
LEGAL MATTERS
The validity of the Class A Common Stock and certain other legal matters in
connection with this Offering will be passed upon for the Company by Correro
Fishman Haygood Phelps Weiss Walmsley & Casteix, L.L.P., New Orleans, Louisiana.
Certain legal matters in connection with the Class A Common Stock offered hereby
will be passed upon for the Underwriters by Latham & Watkins, Los Angeles,
California.
EXPERTS
The consolidated financial statements of US Unwired Inc. and subsidiaries
as of December 31, 1994 and 1995 and September 30, 1996 and for each of the
years in the three-year period ended December 31, 1995 and the nine months ended
September 30, 1996, and the financial statements of Miscellco Communications,
Inc. for the year ended December 31, 1994 and the four-month period ended April
30, 1995, and the financial statements of West Alabama Cellular Telephone
Company, Inc. as of December 31, 1995 and May 15, 1996 and for the year ended
December 31, 1995 and the period from January 1, 1996 to May 15, 1996, and the
financial statements of Alabama 4 System as of June 30, 1996 and for the period
October 1, 1995 to November 6, 1995 and the period from November 7, 1995 to June
30, 1996, have been included herein and in the Registration Statement in
reliance upon the reports of KPMG Peat Marwick LLP, independent certified
67
<PAGE> 70
public accountants, appearing elsewhere herein, and upon the authority of said
firm as experts in accounting and auditing.
The report of KPMG Peat Marwick LLP covering the financial statements of
Alabama 4 System contains an explanatory paragraph that refers to a business
combination in 1995 accounted for as a purchase involving assets comprising a
portion of Alabama 4 System. As a result of the acquisition, financial
information of Alabama 4 System for periods after November 6, 1995 is presented
on a different cost basis than that for periods before November 6, 1995 and,
therefore, such information is not comparable.
The balance sheet of Alabama 4 System as of September 30, 1995 and the
related statements of operations, stockholders' equity (deficit) and cash flows
for the years ended September 30, 1994 and 1995 have been included herein and in
the Registration Statement in reliance on the report of Elliot H. Goldberg, CPA,
P.C., independent auditor, upon the authority of such person as an expert in
accounting and auditing.
The statements of operations, stockholders' equity and cash flows of
Miscellco Communications, Inc. for the year ended December 31, 1993 have been
included herein and in the Registration Statement in reliance upon the report of
Smith, Turner & Reeves, independent certified public accountants, appearing
elsewhere herein, and upon the authority of said firm as experts in accounting
and auditing.
68
<PAGE> 71
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
US UNWIRED INC.:
Independent Auditors' Report........................................................ F-2
Consolidated Balance Sheets as of December 31, 1994 and 1995 and
September 30, 1996............................................................... F-3
Consolidated Statements of Operations for the years ended December 31, 1993, 1994
and 1995 and the nine months ended September 30, 1995 (unaudited) and 1996....... F-4
Consolidated Statements of Shareholders' Equity for the years ended December 31,
1993, 1994 and 1995 and the nine months ended September 30, 1996................. F-5
Consolidated Statements of Cash Flows for the years ended December 31, 1993, 1994
and 1995 and the nine months ended September 30, 1995 (unaudited) and 1996....... F-6
Notes to Consolidated Financial Statements.......................................... F-7
MISCELLCO COMMUNICATIONS, INC.:
Independent Auditors' Report........................................................ F-19
Independent Auditors' Report........................................................ F-20
Statements of Operations for the years ended December 31, 1993, 1994 and the four
months ended April 30, 1995...................................................... F-21
Statements of Stockholders' Equity for the years ended December 31, 1993 and 1994
and the four months ended April 30, 1995......................................... F-22
Statements of Cash Flows for the years ended December 31, 1993 and 1994 and the four
months ended April 30, 1995...................................................... F-23
Notes to Financial Statements....................................................... F-24
WEST ALABAMA CELLULAR TELEPHONE COMPANY, INC.:
Independent Auditors' Report........................................................ F-26
Balance Sheets as of December 31, 1995 and May 15, 1996............................. F-27
Statements of Operations for the year ended December 31, 1995 and the period from
January 1, 1996 to May 15, 1996.................................................. F-28
Statements of Stockholders' Equity (Deficit) for the year ended December 31, 1995
and the period from January 1, 1996 to May 15, 1996.............................. F-29
Statements of Cash Flows for the year ended December 31, 1995 and the period from
January 1, 1996 to May 15, 1996.................................................. F-30
Notes to Financial Statements....................................................... F-31
ALABAMA 4 SYSTEM:
Independent Auditors' Report........................................................ F-34
Independent Auditors' Report........................................................ F-35
Balance Sheets as of September 30, 1995 and June 30, 1996........................... F-36
Statements of Operations for the years ended September 30, 1994 and 1995, the period
from October 1, 1995 to November 6, 1995 and the period from November 7, 1995
to June 30, 1996................................................................. F-37
Statements of Stockholders' Equity (Deficit) for the years ended September 30, 1994
and 1995, the period from October 1, 1995 to November 6, 1995 and the period from
November 7, 1995 to June 30, 1996................................................ F-38
Statements of Cash Flows for the years ended September 30, 1994 and 1995, the period
from October 1, 1995 to November 6, 1995 and the period from November 7, 1995 to
June 30, 1996.................................................................... F-39
Notes to Financial Statements....................................................... F-40
</TABLE>
F-1
<PAGE> 72
INDEPENDENT AUDITORS' REPORT
The Board of Directors
US Unwired Inc. and subsidiaries:
We have audited the accompanying consolidated balance sheets of US Unwired
Inc. and subsidiaries as of December 31, 1994 and 1995, and September 30, 1996,
and the related consolidated statements of operations, shareholders' equity, and
cash flows for each of the years in the three-year period ended December 31,
1995 and the nine-month period ended September 30, 1996. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of US Unwired
Inc. and subsidiaries as of December 31, 1994 and 1995, and September 30, 1996
and the results of their operations and their cash flows for each of the years
in the three-year period ended December 31, 1995 and the nine-month period ended
September 30, 1996 in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
New Orleans, Louisiana
December 13, 1996, except as to note 15
which is as of January 16, 1997
F-2
<PAGE> 73
US UNWIRED INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------- SEPTEMBER 30,
1994 1995 1996
----------- ----------- -------------
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents........................ $ 5,323,594 $ 5,101,601 $ 8,366,783
Restricted cash.................................. -- -- 1,735,000
Subscriber receivables (less allowance for
doubtful accounts of $339,898, $1,006,000 and
$2,213,570 at December 31, 1994 and 1995 and
September 30, 1996, respectively)............. 2,445,891 5,474,179 7,977,430
Receivable from affiliate........................ 424,497 -- --
Other receivables................................ 266,066 235,439 693,521
Inventory........................................ 804,878 1,600,570 1,683,137
Prepaid expenses................................. 121,644 133,515 355,431
----------- ----------- ------------
Total current assets..................... 9,386,570 12,545,304 20,811,302
Investments in unconsolidated affiliates........... 554,291 5,449,719 5,426,434
Property and equipment, net of accumulated
depreciation of $9,702,939, $13,484,855 and
$17,473,925 as of December 31, 1994 and 1995 and
September 30, 1996, respectively................. 13,261,076 20,911,272 26,407,022
Cellular licenses, net of accumulated amortization
of $1,008,478, $2,779,000 and $5,282,800 as of
December 31, 1994 and 1995 and September 30,
1996, respectively............................... 10,094,786 38,784,432 76,355,260
Deferred income taxes.............................. 351,635 483,862 578,950
Other assets....................................... 1,992,064 579,262 1,354,495
----------- ----------- ------------
Total assets............................. $35,640,422 $78,753,851 $ 130,933,463
=========== =========== ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable................................. $ 1,368,685 $ 2,821,966 $ 4,842,935
Accrued expenses................................. 1,030,227 2,034,406 4,938,173
Current maturities of long-term debt............. 665,762 2,776,828 7,996,363
----------- ----------- ------------
Total current liabilities................ 3,064,674 7,633,200 17,777,471
Long-term debt..................................... 13,020,412 49,274,443 87,681,399
Minority interest.................................. 896,902 442,981 139,935
Shareholders' equity:
Preferred stock, authorized 40,000,000 shares;
none issued or outstanding.................... -- -- --
Common stock, $0.01 par value
Class A: Authorized 100,000,000 shares; none
issued or outstanding....................... -- -- --
Class B: Authorized 60,000,000 shares; issued
and outstanding, 11,066,927, 11,183,428 and
11,250,000 shares at December 31, 1994 and
1995 and September 30, 1996, respectively... 110,669 111,834 112,500
Additional paid-in capital....................... 1,514,724 1,655,309 1,834,643
Retained earnings................................ 17,033,041 19,636,084 23,387,515
----------- ----------- ------------
Total shareholders' equity............... 18,658,434 21,403,227 25,334,658
Commitments and contingencies
----------- ----------- ------------
Total liabilities and shareholders'
equity................................. $35,640,422 $78,753,851 $ 130,933,463
=========== =========== ============
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE> 74
US UNWIRED INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
----------------------------------------- --------------------------
1993 1994 1995 1995 1996
----------- ----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues:
Cellular service:
Subscriber...................... $ 9,059,203 $14,547,619 $28,801,812 $19,262,669 $32,635,016
Roaming......................... 4,084,268 6,603,242 8,909,395 6,248,134 9,609,479
Merchandise sales.................. 540,961 1,002,221 1,403,425 998,339 1,286,595
Other revenue...................... 661,369 400,257 136,962 160,077 327,844
----------- ----------- ----------- ----------- -----------
14,345,801 22,553,339 39,251,594 26,669,219 43,858,934
----------- ----------- ----------- ----------- -----------
Operating expenses:
Cost of service.................... 4,512,823 7,444,662 11,430,334 7,891,366 11,621,569
Merchandise cost of sales.......... 719,884 2,517,994 3,372,820 1,922,518 3,376,837
General and administrative......... 1,692,353 2,498,484 5,308,109 3,553,544 7,078,436
Sales and marketing................ 2,735,772 3,768,069 6,261,559 3,986,169 5,448,448
Depreciation and amortization...... 2,036,877 2,892,457 5,685,911 3,853,731 6,432,076
----------- ----------- ----------- ----------- -----------
11,697,709 19,121,666 32,058,733 21,207,328 33,957,366
----------- ----------- ----------- ----------- -----------
Operating income..................... 2,648,092 3,431,673 7,192,861 5,461,891 9,901,568
----------- ----------- ----------- ----------- -----------
Other income (expense):
Interest expense................... (177,472) (789,856) (3,401,424) (2,253,020) (4,516,120)
Interest income.................... 269,548 160,405 336,253 234,771 213,952
Gain (loss) on sale of assets...... 9,984 24,611 (32,137) -- --
----------- ----------- ----------- ----------- -----------
Total other income
(expense)................ 102,060 (604,840) (3,097,308) (2,018,249) (4,302,168)
----------- ----------- ----------- ----------- -----------
Income before income taxes, minority
interest and equity in income of
affiliates......................... 2,750,152 2,826,833 4,095,553 3,443,642 5,599,400
Income tax expense................... 1,316,648 1,914,112 2,290,857 1,776,572 2,375,089
----------- ----------- ----------- ----------- -----------
Income before minority interest and
equity in income of affiliates..... 1,433,504 912,721 1,804,696 1,667,070 3,224,311
Minority interest in losses of
subsidiary......................... 401,292 439,172 453,921 379,170 303,046
Equity in income of affiliates....... 73,739 397,795 344,426 272,316 224,074
----------- ----------- ----------- ----------- -----------
Net income........................... $ 1,908,535 $ 1,749,688 $ 2,603,043 $ 2,318,556 $ 3,751,431
=========== =========== =========== =========== ===========
Net income per share................. $ 0.17 $ 0.16 $ 0.23 $ 0.21 $ 0.33
=========== =========== =========== =========== ===========
Weighted average shares
outstanding........................ 10,933,782 11,108,874 11,242,334 11,239,783 11,250,000
=========== =========== =========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE> 75
US UNWIRED INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995 AND
THE NINE MONTHS ENDED SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
CLASS A CLASS B ADDITIONAL
PREFERRED COMMON COMMON PAID-IN RETAINED
STOCK STOCK STOCK CAPITAL EARNINGS TOTAL
--------- ------- -------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1993..................... $ -- $ -- $108,672 $1,143,428 $13,374,818 $14,626,918
Net income..................................... -- -- -- -- 1,908,535 1,908,535
--------- ------- -------- ---------- ----------- -----------
Balance at December 31, 1993................... -- -- 108,672 1,143,428 15,283,353 16,535,453
Issuance of 199,716.42 shares of Class B Common
Stock........................................ -- -- 1,997 112,003 -- 114,000
Contributed capital............................ -- -- -- 259,293 -- 259,293
Net income..................................... -- -- -- -- 1,749,688 1,749,688
--------- ------- -------- ---------- ----------- -----------
Balance at December 31, 1994................... -- -- 110,669 1,514,724 17,033,041 18,658,434
Issuance of 116,501.24 shares of Class B Common
Stock........................................ -- -- 1,165 140,585 -- 141,750
Net income..................................... -- -- -- -- 2,603,043 2,603,043
--------- ------- -------- ---------- ----------- -----------
Balance at December 31, 1995................... -- -- 111,834 1,655,309 19,636,084 21,403,227
Issuance of 66,572.14 shares of Class B Common
Stock........................................ -- -- 666 179,334 -- 180,000
Net income..................................... -- -- -- -- 3,751,431 3,751,431
--------- ------- -------- ---------- ----------- -----------
Balance at September 30, 1996.................. $ -- $ -- $112,500 $1,834,643 $23,387,515 $25,334,658
========= ======= ======== ========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE> 76
US UNWIRED INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
-------------------------------------------- ----------------------------
1993 1994 1995 1995 1996
------------ ------------ ------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income............................... $ 1,908,535 $ 1,749,688 $ 2,603,043 $ 2,318,556 $ 3,751,431
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization.......... 2,036,877 2,892,457 5,685,911 3,853,731 6,432,076
Minority interest...................... (401,292) (439,172) (453,921) (379,171) (303,046)
Unearned revenue....................... 89,000 158,000 227,000 160,000 153,000
Bad debt provision..................... 154,344 106,349 589,338 299,717 1,120,351
Deferred tax expense................... 75,593 (330,179) (132,227) (56,419) (95,088)
Gain on the sale of assets............. (9,984) (24,611) (32,137) --
Equity in income of affiliates......... (73,739) (397,795) (344,426) (272,316) (224,074)
Non-cash compensation.................. -- 114,000 141,750 141,750 180,000
Changes in operating assets and liabilities:
Subscriber receivables................... (185,758) (1,087,295) (2,834,096) (1,449,966) (2,861,574)
Receivable from affiliates............... (542,139) 542,139 424,497 424,497 --
Other receivables........................ (272,892) 11,658 30,627 29,374 (458,082)
Inventory................................ (99,524) (578,223) (639,131) (111,782) 47,981
Prepaid expenses......................... (75,323) (23,313) 357 (262,147) (215,285)
Other assets............................. 1,485,346 937,485 2,534,922 2,556,359 (407,300)
Accounts payable......................... 1,576,843 (876,938) 1,199,684 (1,104,527) 933,174
Accrued expenses......................... 1,870,811 (1,190,584) (2,263,800) (536,087) 884,142
------------ ------------ ------------ ------------ ------------
Net cash provided by operating
activities...................... 7,536,698 1,563,666 6,737,391 5,611,569 8,937,706
------------ ------------ ------------ ------------ ------------
Cash flows from investing activities:
Purchase of property and equipment....... (8,038,020) (4,460,389) (5,850,687) (3,498,578) (3,554,589)
Proceeds from sale of property and
equipment.............................. 20,800 756,443 404,084 420,535 2,226
Acquisition of Kansas RSAs............... -- -- (35,111,038) (35,111,038) --
Acquisition of Alabama RSA 3............. -- -- -- -- (17,871,173)
Acquisition of Alabama RSA 4............. -- -- -- -- (27,776,313)
Acquisition of Mississippi RSA 1......... (6,000,000) -- -- -- --
Acquisition of Mississippi RSAs 3 and
4...................................... (3,042,608) -- -- -- --
Transfer to escrow....................... -- (1,736,517) -- -- --
Distributions from unconsolidated
affiliates............................. -- 360,909 368,998 285,299 2,247,359
Investment in unconsolidated
affiliates............................. (184,016) (104,828) (4,920,000) (2,920,000) (2,000,000)
------------ ------------ ------------ ------------ ------------
Net cash used in investing
activities...................... (17,243,844) (5,184,382) (45,108,643) (40,823,782) (48,952,490)
------------ ------------ ------------ ------------ ------------
Cash flows from financing activities:
Proceeds from long-term debt, including
interest capitalized................... 6,539,970 7,625,966 40,321,946 37,862,813 46,026,906
Principal payments on long-term debt..... -- (1,668,076) (1,956,849) (1,448,203) (2,400,415)
Deferred financing costs................. -- (155,189) (215,838) (322,935) (346,525)
------------ ------------ ------------ ------------ ------------
Net cash provided by financing
activities...................... 6,539,970 5,802,701 38,149,259 36,091,675 43,279,966
Net increase (decrease) in cash... (3,167,176) 2,181,985 (221,993) 879,462 3,265,182
------------ ------------ ------------ ------------ ------------
Cash at beginning of period................ 6,308,785 3,141,609 5,323,594 5,323,594 5,101,601
------------ ------------ ------------ ------------ ------------
Cash at end of period...................... $ 3,141,609 $ 5,323,594 $ 5,101,601 $ 6,203,056 $ 8,366,783
============ ============ ============ ============ ============
Supplemental disclosures of cash flow
information:
Cash paid for interest................... $ 60,361 $ 30,532 $ 2,190,027 $ 2,094,352 $ 4,108,555
============ ============ ============ ============ ============
Cash paid for income taxes............... $ 1,530,595 $ 2,534,902 $ 2,280,200 $ 1,756,200 $ 2,315,000
============ ============ ============ ============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE> 77
US UNWIRED INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION FOR THE NINE MONTHS
ENDED SEPTEMBER 30, 1995 IS UNAUDITED)
(1) DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Description of Organization
US Unwired Inc. ("Company") is principally engaged in the ownership and
operation of wireless communications systems in the south-central and the
mid-western United States. At December 31, 1995, the Company owned and operated
cellular communications systems in 14 Rural Service Areas ("RSAs"), excluding
two RSAs which it operates under interim operating authority from the Federal
Communications Commission ("FCC"), and one Metropolitan Statistical Area
("MSA"). These markets are clustered into geographic regions that include
portions of Louisiana, Mississippi, Alabama, Texas, Kansas and Oklahoma.
(b) Consolidation Policy
The consolidated financial statements include the accounts of US Unwired
Inc. and its majority-owned subsidiaries. All significant intercompany balances
and transactions are eliminated in consolidation. Losses of subsidiaries
attributable to minority shareholders in excess of the minority interest in the
equity capital of the subsidiary are not eliminated in consolidation.
(c) Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments purchased with remaining maturities of three
months or less to be cash equivalents.
(d) Inventory
Inventory consists of cellular telephones and related accessories and is
carried at the lower of cost or market. Cost is determined by the first-in,
first-out method.
(e) Property and Equipment
Property and equipment is stated at cost and depreciated on a straight-line
basis over the estimated useful lives of the assets as follows:
<TABLE>
<CAPTION>
YEARS
-------
<S> <C>
Buildings....................................................... 31.5
Leasehold improvements.......................................... 5
Cellular facilities and equipment............................... 5 to 7
Furniture and fixtures.......................................... 5
Vehicles........................................................ 5
</TABLE>
Routine maintenance and repairs are charged to operating expense while
costs of betterments and renewals are capitalized.
Cellular equipment held under capital leases is amortized on a
straight-line basis over the lease term of 5 years. Amortization of assets held
under capital leases is included in depreciation and amortization.
(f) Cellular Licenses and Other Assets
Cellular licenses consist primarily of costs incurred in connection with
the Company's acquisition of cellular licenses and systems. These assets are
recorded at cost and amortized using the straight-line method over an estimated
useful life of 20 years. The Company annually evaluates the propriety of the
carrying values
F-7
<PAGE> 78
US UNWIRED INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION FOR THE NINE MONTHS
ENDED SEPTEMBER 30, 1995 IS UNAUDITED)
of its cellular licenses and other system-related assets using estimated
undiscounted future cash flows of the market to which the license relates to
determine whether current events or circumstances warrant adjustments to reduce
the carrying amounts to fair value. There have been no such reductions through
December 31, 1995.
Other assets include deferred financing costs incurred in connection with
the issuance of the Company's long-term debt which are capitalized and amortized
over the terms of the related debt using the interest method.
(g) Investments in Unconsolidated Affiliates
The Company's investments in less than majority-owned affiliated companies
in which the Company's interest is 20% or more are accounted for using the
equity method and equity in earnings are reported as investment income.
(h) Revenue Recognition
The Company earns revenue by providing access to and usage of its cellular
and paging networks and sales of cellular and paging merchandise. Access revenue
is billed one month in advance and is recognized when earned. Usage revenue is
recognized when the service is rendered. Both access and usage revenues are
classified as service revenues in the accompanying statements of operations.
Revenues from sales of merchandise are recognized when the merchandise is
delivered.
(i) Commissions
Commissions are paid to sales agents for customer activations and are
recognized in the month the customer is activated within the cellular system.
(j) Income Taxes
The Company accounts for income taxes using the asset and liability method,
under which deferred tax assets and liabilities are recognized for the future
tax consequences attributable to differences between the financial statement
carrying amounts of assets and liabilities and their respective tax bases.
Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.
(k) Stock Based Compensation
The Company plans to adopt a stock option plan providing for the grant of a
fixed number of shares to employees with an exercise price equal to the fair
value of the shares at the date of grant. The Company will account for stock
option grants in accordance with APB Opinion 25, Accounting for Stock Issued to
Employees, and accordingly, will recognize no compensation expense for stock
option grants. The Company will continue to apply the provision of APB 25 with
regard to financial statement recognition of stock-based compensation to
employees.
(l) Net Income Per Share
Net income per share is based on net income divided by the weighted average
number of common shares outstanding during the period presented. All share and
per share data have been restated to give effect to the recapitalization and
reorganization discussed in note 2 to the Consolidated Financial Statements. All
shares issued within one year of this Offering have been treated as outstanding
for all periods presented.
F-8
<PAGE> 79
US UNWIRED INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION FOR THE NINE MONTHS
ENDED SEPTEMBER 30, 1995 IS UNAUDITED)
(m) Use of Estimates
The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
(n) Interim Financial Information
In the opinion of management, the accompanying interim consolidated
financial information of the Company contains all adjustments, consisting only
of those of a normal recurring nature, necessary to present fairly the Company's
results of its operations and cash flows for the nine-month period ended
September 30, 1995 and 1996. These interim results are not necessarily
indicative of the results to be expected for the full fiscal year.
(2) RECAPITALIZATION AND REORGANIZATION
The Company was incorporated as Mercury, Inc. in 1967 by the principal
shareholders of Cameron Communications Corporation ("Cameron") to provide
complimentary services to Cameron's local landline telephone service. Prior to
October 31, 1996, the cellular and paging communications services provided by
the Company were conducted by a subsidiary of Cameron and by the Company and its
subsidiaries, all of which were affiliated through common stock ownership
control by a related group of shareholders. In anticipation of the Company's
initial public offering of its common stock, effective October 31, 1996, the
Company and Cameron completed a reorganization plan for the purpose of combining
the wireless communications businesses of these related entities and separating
the wireless communications business of Cameron from its traditional landline
telephone business.
To accomplish the restructuring, the Company and Cameron executed a series
of transactions which included the following: (i) transfer of the landline
telephone business to a newly-formed subsidiary of Cameron ("Newco") and
spin-off of Newco to its shareholders, and (ii) merger of Cameron into the
Company and issuance of 2.192108 shares of Class B Common Stock of the Company
on a pro-rata basis to Cameron shareholders, resulting in the combination of all
wireless telecommunications businesses within the Company. In October 1996, the
Board of Directors of the Company authorized the issuance of Class A Common
Stock, $0.01 par value per share, to be registered under Securities Act of 1933
in the Company's initial public offering.
The combination of the wireless communications business represents a
combination of entities under common control and has been accounted for at
historical cost in a manner similar to that in pooling-of-interests accounting.
The spin-off of the landline telephone business, which has been consummated
prior to the date of this Prospectus, has been treated as a change in reporting
entity, and the historical financial statements have been restated in accordance
with Staff Accounting Bulletin No. 93 since the Company and Newco are in
dissimilar businesses, have been managed and financed historically as if they
were autonomous and will continue to be managed and financed autonomously after
the spin-off. In addition, all share and per share amounts have been
retroactively adjusted to give effect to the issuance of Class B Common Stock
described above.
(3) ACQUISITIONS
In December 1992, the Company acquired a 36.25% interest in Mississippi 34
Cellular Corporation ("MS 34") for approximately $2.6 million. In April 1993,
the Company purchased an additional 14.75%
F-9
<PAGE> 80
US UNWIRED INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION FOR THE NINE MONTHS
ENDED SEPTEMBER 30, 1995 IS UNAUDITED)
interest in MS 34 for approximately $900,000 bringing the total investment to
51%. The Company's investment in MS 34 was accounted for using the equity method
from December 1992 until April 1993, when the Company acquired its controlling
interest. The acquisition of MS 34 has been accounted for using the purchase
method of accounting and, accordingly, the results of operations of MS 34 have
been consolidated from the date on which the Company acquired majority ownership
of MS 34.
In April 1995, the Company purchased the assets of Miscellco
Communications, Inc., principally consisting of the Kansas-1, 2, 6, 7, 11, 12
and 13 RSAs for a purchase price of approximately $35.1 million. In May 1996,
the Company purchased the assets of West Alabama Cellular Telephone Company,
Inc., principally consisting of the Alabama-3 RSA, for a purchase price of
approximately $17.9 million. In July 1996, the Company purchased the Alabama 4
System assets from PriCellular Corporation principally consisting of the
Alabama-4 RSA, for a purchase price of approximately $27.8 million. These
acquisitions have been accounted for using the purchase method of accounting
and, accordingly, the results of operations of the acquired businesses are
included in the results of operations of the Company from the effective dates of
the acquisitions. The Company recorded cellular licenses acquired in these
transactions in the amounts of $30.5 and $39.9 million, respectively, during the
year ended December 31, 1995 and the nine months ended September 30, 1996, which
are being amortized over a twenty-year period using the straight-line method.
Pro forma unaudited consolidated operating results of the Company and the
acquired businesses for the years ended December 31, 1994 and 1995 and the nine
months ended September 30, 1996, assuming the acquisitions had been made as of
January 1, 1994 with respect to Miscellco and January 1, 1995 with respect to
the Alabama-3 and Alabama-4 RSAs, are summarized below:
<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED DECEMBER 31, ENDED
-------------------------- SEPTEMBER 30,
1994 1995 1996
----------- ----------- -------------
<S> <C> <C> <C>
Revenues...................................... $28,544,000 $49,868,000 $ 48,401,000
Net income (loss)............................. $(1,277,000) $ (357,000) $ 3,100,000
Net income (loss) per common share............ $ (0.11) $ (0.03) $ 0.28
</TABLE>
(4) PROPERTY AND EQUIPMENT
Major categories of property and equipment are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------- SEPTEMBER 30,
1994 1995 1996
----------- ------------ -------------
<S> <C> <C> <C>
Land...................................... $ 1,102,897 $ 1,130,302 $ 1,130,302
Buildings................................. 1,411,592 1,854,277 2,374,293
Leasehold improvements.................... 55,409 207,158 210,499
Cellular facilities and equipment......... 19,604,054 29,407,076 36,698,825
Furniture and fixtures.................... 599,450 1,110,567 1,544,510
Vehicles.................................. -- 156,756 178,998
Construction in progress.................. 190,613 529,991 1,743,520
----------- ------------ ------------
22,964,015 34,396,127 43,880,947
Less accumulated depreciation... (9,702,939) (13,484,855) (17,473,925)
----------- ------------ ------------
$13,261,076 $ 20,911,272 $ 26,407,022
=========== ============ ============
</TABLE>
F-10
<PAGE> 81
US UNWIRED INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION FOR THE NINE MONTHS
ENDED SEPTEMBER 30, 1995 IS UNAUDITED)
During the year ended December 31, 1995, the Company began leasing certain
cellular equipment under agreements classified as capital leases. The following
is a summary of equipment held under capital leases as of December 31, 1995 and
September 30, 1996:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1995 1996
------------ -------------
<S> <C> <C>
Cellular facilities and equipment.......................... $3,144,276 $ 3,144,276
Less accumulated depreciation.............................. (302,352) (766,364)
---------- -----------
$2,841,924 $ 2,377,912
========== ===========
</TABLE>
(5) INVESTMENTS IN UNCONSOLIDATED AFFILIATES
Investments in unconsolidated affiliates at December 31, 1994 and 1995 and
September 30, 1996 consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
PERCENTAGE ---------------------- SEPTEMBER 30,
OWNERSHIP 1994 1995 1996
---------- -------- ---------- -------------
<S> <C> <C> <C> <C>
Meretel Communications, L.P............ 24.33% $ -- $2,920,000 $ 2,920,000
Mercury Mobility, L.L.C................ 50% 1,500 2,001,500 2,001,500
GTE Mobilnet of Texas RSA #21 Limited
Partnership.......................... 25% 552,791 528,219 504,934
-------- ---------- -----------
$554,291 $5,449,719 $ 5,426,434
======== ========== ===========
</TABLE>
Summary financial information for GTE Mobilnet of Texas RSA #21 Limited
Partnership is as follows for the years ended December 31, 1994 and 1995 and the
nine months ended September 30, 1996 (unaudited) respectively:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------- SEPTEMBER 30,
1994 1995 1996
---------- ---------- -------------
<S> <C> <C> <C>
Total assets.................................. $2,307,919 $2,248,559 $ 2,379,779
Total liabilities............................. 96,752 135,679 103,530
---------- ---------- -----------
Partners' capital............................. $2,211,167 $2,112,880 $ 2,276,249
========== ========== ===========
Revenues...................................... $2,281,484 $2,067,719 $ 1,659,820
========== ========== ===========
Operating expenses............................ $ 707,786 $ 716,345 $ 523,587
========== ========== ===========
Net income.................................... $1,591,181 $1,377,703 $ 1,152,806
========== ========== ===========
</TABLE>
In June 1995 the Company invested approximately $2.9 million in Meretel
Communications L.P. (the "PCS Partnership") and has committed to make additional
capital contributions of up to approximately $10.1 million upon the successful
acquisition of one or more licenses in certain FCC auctions for broadband
personal communications services ("PCS") licenses. In May 1996, the FCC
completed the auctions for which the PCS Partnership was formed to participate,
and the PCS Partnership was the high bidder for five PCS licenses for a total
bid price of $61.2 million. Four of these licenses were granted in October 1996.
F-11
<PAGE> 82
US UNWIRED INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION FOR THE NINE MONTHS
ENDED SEPTEMBER 30, 1995 IS UNAUDITED)
Mercury Mobility, L.L.C. ("Mobility") was organized in September 1994 for
the purpose of participating in certain FCC auctions for PCS licenses. The
Company and a related party each have a 50% equity interest in Mobility. As of
September 30, 1996, Mobility has not commenced active operations.
(6) ACCRUED EXPENSES
Accrued expenses consists of the following at December 31, 1994 and 1995
and September 30, 1996:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------- SEPTEMBER 30,
1994 1995 1996
---------- ---------- -------------
<S> <C> <C> <C>
Accrued taxes, other than income.............. $ 186,791 $ 382,593 $ 482,148
Accrued interest expense...................... 32,493 295,471 777,256
Accrued payroll............................... 100,000 262,312 300,000
Unearned revenue and customer deposits........ 429,359 700,017 899,360
Escrow payable................................ -- -- 1,735,000
Other......................................... 281,584 394,013 744,409
---------- ---------- ----------
$1,030,227 $2,034,406 $ 4,938,173
========== ========== ==========
</TABLE>
(7) LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER
-------------------------- 30,
1994 1995 1996
----------- ----------- -----------
<S> <C> <C> <C>
Debt outstanding under credit facilities:
Bank financing.............................. $ 2,446,075 $36,448,395 $80,356,066
Vendor financing............................ 7,763,922 9,690,298 9,690,298
Capitalized lease obligation.................. -- 2,950,869 2,549,208
Subordinated note payable to a related party,
interest at 5.45%, principal and interest
payable in quarterly installments, due
January 2002................................ 2,740,415 2,891,709 3,012,190
Other notes payable to related parties........ 735,762 70,000 70,000
----------- ----------- -----------
13,686,174 52,051,271 95,677,762
Less current maturities............. (665,762) (2,776,828) (7,996,363)
----------- ----------- -----------
Long-term debt, excluding current
maturities.................................. $13,020,412 $49,274,443 $87,681,399
=========== =========== ===========
</TABLE>
Long-term obligations mature as follows:
<TABLE>
<CAPTION>
DEBT LEASES TOTAL
----------- ---------- -----------
<S> <C> <C> <C>
September 30, 1997........................... $ 7,463,387 $ 764,135 $ 8,227,522
September 30, 1998........................... 8,018,528 764,135 8,782,663
September 30, 1999........................... 11,044,892 764,135 11,809,027
September 30, 2000........................... 13,002,696 685,608 13,688,304
September 30, 2001........................... 15,979,157 31,012 16,010,169
Thereafter................................... 37,619,894 -- 37,619,894
----------- ---------- -----------
$93,128,554 $3,009,025 $96,137,579
=========== ========== ===========
</TABLE>
F-12
<PAGE> 83
US UNWIRED INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION FOR THE NINE MONTHS
ENDED SEPTEMBER 30, 1995 IS UNAUDITED)
Long-term lease obligation includes amounts representing interest at 8.24%
totaling $613,437 and $459,817 at December 31, 1995 and September 30, 1996,
respectively.
The notes outstanding under the bank credit facilities include a loan from
Cameron Telephone Company, a subsidiary of Cameron, and joint financing
arrangements with CTC Financial, Inc., a subsidiary of Cameron Telephone
Company, pursuant to which funds have been loaned to CTC Financial, Inc. and
reloaned on a pass-through basis to the Company. On November 22, 1996, CTC
Financial, Inc. assigned its interest in the loans to Mercury Cellular of
Kansas, Inc., a subsidiary of the Company. The notes outstanding under the bank
credit facilities generally provide for monthly amortization of principal and
interest with final maturities at various dates through December 20, 2002. The
notes outstanding under the vendor credit facility provide for quarterly
interest payments beginning March 1996 and quarterly amortization of principal
beginning December 1997 with the final maturity on December 20, 2003. Weighted
average interest rates, under the credit facilities are comprised of a
combination of fixed rates over the term of the note or variable rates based on
either a variable lending rate established by a commercial bank plus a margin
ranging up to 1% or the average offering rate for three-month commercial paper
of major corporations, are 9.33%, 8.92% and 8.27% at December 31, 1994 and 1995
and September 30, 1996, respectively. As of September 30, 1996, the Company had
an unused commitment with a commercial bank of approximately $2.1 million which
expires December 31, 1996. Substantially all of the assets of the Company are
pledged to secure the Company's obligations under the various loans and credit
facilities described above. Under key covenants outlined in the credit
facilities, the Company is restricted from paying dividends, and must meet
certain minimum operating results, a maximum leverage ratio, and a minimum debt
service coverage ratio, among other requirements.
(8) INCOME TAXES
Income tax expense (benefit) for the years ended December 31, 1993, 1994,
and 1995 and the nine months ended September 30, 1996 are as follows:
<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED DECEMBER 31, ENDED
-------------------------------------- SEPTEMBER 30,
1993 1994 1995 1996
---------- ---------- ---------- -------------
<S> <C> <C> <C> <C>
Federal:
Current........................... $1,051,668 $1,923,534 $2,082,151 $ 2,117,134
Deferred.......................... 67,636 (295,423) (118,307) (85,079)
---------- ---------- ---------- ----------
1,119,304 1,628,111 1,963,844 2,032,055
---------- ---------- ---------- ----------
State:
Current........................... 189,387 320,757 340,933 353,043
Deferred.......................... 7,957 (34,756) (13,920) (10,009)
---------- ---------- ---------- ----------
197,344 286,001 327,013 343,034
---------- ---------- ---------- ----------
Total..................... $1,316,648 $1,914,112 $2,290,857 $ 2,375,089
========== ========== ========== ==========
</TABLE>
F-13
<PAGE> 84
US UNWIRED INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION FOR THE NINE MONTHS
ENDED SEPTEMBER 30, 1995 IS UNAUDITED)
Income tax benefit differed from the amounts computed by applying the U.S.
federal income tax rate of 34% for the years ended December 31, 1993, 1994 and
1995 and the nine months ended September 30, 1996 to income before income taxes,
minority interest and equity in income of affiliates as a result of the
following:
<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED DECEMBER 31, ENDED
-------------------------------------- SEPTEMBER 30,
1993 1994 1995 1996
---------- ---------- ---------- -------------
<S> <C> <C> <C> <C>
Computed "expected" tax expense..... $ 935,052 $ 961,123 $1,392,488 $ 1,903,796
Change in valuation allowance....... 315,840 594,716 635,622 137,419
State income taxes, net of federal
income taxes...................... 127,007 183,859 208,332 193,172
Gain from sale of voice mail
operations........................ -- 88,159 -- --
Equity in income of affiliates...... 25,071 135,250 117,105 76,185
Other, net.......................... (86,322) (48,995) (62,690) 64,517
---------- ---------- ---------- ----------
$1,316,648 $1,914,112 $2,290,857 $ 2,375,089
========== ========== ========== ==========
</TABLE>
The tax effects of temporary differences that give rise to the significant
components of deferred tax assets and deferred tax liabilities are presented
below:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------- SEPTEMBER 30,
1994 1995 1996
---------- ----------- -------------
<S> <C> <C> <C>
Deferred tax assets:
Operating loss carryforwards................. $1,306,123 $ 2,359,372 $ 2,473,872
Allowance for doubtful accounts.............. 129,161 382,280 841,157
Accrued interest to related parties.......... 277,109 304,901 330,948
Unearned revenue............................. 140,000 231,000 316,000
Other........................................ 38,000 76,000 114,000
---------- ----------- -----------
Gross deferred tax asset............. 1,890,393 3,353,553 4,075,977
Less valuation allowance....................... (947,041) (1,582,663) (1,720,082)
---------- ----------- -----------
Net deferred tax asset............... 943,352 1,770,890 2,355,895
Deferred tax liabilities --
Fixed assets, principally due to differences
in depreciation........................... 484,447 1,179,758 1,669,675
Other........................................ 107,270 107,270 107,270
---------- ----------- -----------
Deferred tax liabilities............. 591,717 1,287,028 1,776,945
---------- ----------- -----------
$ 351,635 $ 483,862 $ 578,950
========== =========== ===========
</TABLE>
In assessing the realizability of deferred tax assets, the Company
considers whether it is more likely than not that some portion or all of the
deferred tax assets will not be realized. The ultimate realization of deferred
tax assets is dependent upon the generation of future taxable income during the
periods in which those temporary differences become deductible. The Company
considers the scheduled reversal of deferred tax liabilities, projected future
taxable income and tax planning strategies in making this assessment. Based upon
these considerations, the Company has provided a valuation allowance to reduce
the carrying value of deferred tax assets related to net operating losses of the
Company's 51% owned subsidiary to the amounts that can be realized through
future reversals of existing taxable temporary differences.
Prior to consummation of the reorganization described in Note 2, certain of
the Company's cellular and paging activities were included in the consolidated
federal income tax returns of Cameron and US Unwired Inc. Effective November 1,
1996, the Company will file a consolidated federal income tax return which will
F-14
<PAGE> 85
US UNWIRED INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION FOR THE NINE MONTHS
ENDED SEPTEMBER 30, 1995 IS UNAUDITED)
include US Unwired Inc. and its qualifying subsidiaries. MS 34, a 51%-owned
subsidiary, files a separate federal income tax return.
The Company has obtained a private letter ruling from the Internal Revenue
Service to the effect that no gain or loss would be recognized by Cameron or its
shareholders by virtue of the transfer of assets or spin-off of Cameron's
landbased telephone business. In addition, tax counsel for the Company has
informed it that the merger of Cameron into the Company qualifies as a
reorganization under Section 368(a)(1)(A) of the Internal Revenue Code so that
no gain or loss would be recognized by the respective corporations or their
shareholders by virtue of the merger.
The Company had the following net operating loss carryforwards ("NOL") as
of September 30, 1996 for Federal income tax purposes, expiring in the year
indicated.
<TABLE>
<CAPTION>
COMPANY NOL EXPIRATION
------------------------------------------------------------- ---------- ----------
<S> <C> <C>
US Unwired Inc............................................... $1,340,000 2007
MS 34........................................................ 4,790,000 2007
</TABLE>
(9) SHAREHOLDERS' EQUITY
The Company is authorized by its Articles of Incorporation to issue
40,000,000 shares of preferred stock upon the authorization of the Company's
Board of Directors. The Board of Directors is authorized to fix the dividend
rights and terms, conversion and voting rights, redemption rights and other
privileges and restrictions applicable to the stock.
The Company has two classes of authorized common stock, Class A Common
Stock and Class B Common Stock. Other than as to voting rights and transfer
restrictions applicable to the Class B shares, the Class A and Class B shares
have identical rights.
Class A shares have one vote per share and Class B shares have ten votes
per share. Shares of Class B Common Stock generally convert automatically into
shares of Class A Common Stock on a share-for-share basis upon the transfer of
the Class B shares to other than a "qualified holder," generally the original
holders of Class B shares. Class B shares are also subject to other transfer
restrictions.
In February 1994, January 1995 and January 1996 the Company granted to key
employees shares of Common Stock that, after the reclassification of Common
Stock discussed in Note 2, amounts to 199,716.42, 116,501.24 and 66,572.14
shares, respectively, of Class B Common Stock. The shares were issued at the
fair market value of the Company's common stock, based upon an independent
valuation, at the date of the grant. The Company recognized compensation expense
of $114,000 and $141,750, respectively, during the years ended December 31, 1994
and 1995, and $180,000 during the nine months ended September 30, 1996 in
accordance with APB 25.
(10) COMMITMENTS AND CONTINGENCIES
The Company participates in a 401(k) retirement plan (the "401(k) plan")
sponsored by a related party for the benefit of its employees. Employees are
eligible to participate in the 401(k) plan when the employee has completed one
year of service and has attained an age of 18. Under the 401(k) plan,
participating employees may defer a portion of their pretax earnings up to
certain limits prescribed by the Internal Revenue Service. The Company
contributes a discretionary match equal to a percentage of the amount deferred
by the employee and a discretionary amount determined by the Company from
current or accumulated net profits. The Company's contributions are fully vested
upon the completion of 5 years of service. Compensation expense related to the
401(k) plan was approximately $37,000, $63,000, $118,000 and $82,000 for the
years ended December 31, 1993, 1994, 1995 and the nine months ended September
30, 1996, respectively.
F-15
<PAGE> 86
US UNWIRED INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION FOR THE NINE MONTHS
ENDED SEPTEMBER 30, 1995 IS UNAUDITED)
The Company is a party to various operating leases for facilities and
equipment. Future minimum lease payments due under operating leases are as
follows:
<TABLE>
<CAPTION>
YEARS ENDING SEPTEMBER 30,
- --------------------------
<S> <C>
1997............................................. $384,881
1998............................................. 294,448
1999............................................. 264,479
2000............................................. 175,245
2001............................................. 139,294
Thereafter....................................... 316,141
</TABLE>
Rental expense related to operating leases was $147,529, $214,444, $459,740
and $542,873, for the years ended December 31, 1993, 1994 and 1995 and the nine
months ended September 30, 1996, respectively.
The Company is involved in various claims and legal actions arising in the
ordinary course of business. In the opinion of management, the ultimate
disposition of these matters will not have a material adverse effect on the
Company's consolidated financial position, results of operations or liquidity.
The Company has agreed to guarantee repayment of up to $6.2 million, plus
interest and fees thereon, under a commitment for financing obtained by the PCS
Partnership from Rural Telephone Finance Corporation ("RTFC").
(11) CONCENTRATIONS OF CREDIT RISK
Financial instruments which potentially expose the Company to
concentrations of credit risk, as defined by Financial Accounting Standards
Board Statement No. 105, consist primarily of cash and accounts receivable. The
Company places its cash and temporary cash investments with high credit quality
financial services companies. Collectibility of subscriber receivables is
impacted by economic trends in each of the Company's markets and the Company has
provided an allowance which it believes is adequate to absorb losses from
uncollectible accounts.
(12) SUPPLEMENTAL CASH FLOW DISCLOSURE
The Company has consummated the acquisition of various cellular operations,
along with certain other assets, during the three years ended December 31, 1995
and the nine months ended September 30, 1995 (unaudited) and 1996. In connection
with these acquisitions, the following assets were acquired and liabilities
assumed:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, NINE MONTHS ENDED SEPTEMBER 30,
------------------------------------------ -------------------------------
1993 1994 1995 1995 1996
----------- ----------- ------------ ------------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Property and equipment.... $ 246,451 $ -- $ 4,625,989 $ 4,625,989 $ 5,252,898
Intangible assets......... 11,076,716 -- 30,544,636 30,544,636 39,825,102
Long-term debt............ (570,000) -- -- -- --
Other assets and
liabilities excluding
cash and cash
equivalents............. 26,807 -- (59,587) (59,587) 569,486
Minority interest......... (1,737,366) -- -- -- --
----------- ----------- ------------ ------------ -----------
$ 9,042,608 $ -- $ 35,111,038 $ 35,111,038 $45,647,486
=========== =========== ============ ============ ===========
</TABLE>
F-16
<PAGE> 87
US UNWIRED INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION FOR THE NINE MONTHS
ENDED SEPTEMBER 30, 1995 IS UNAUDITED)
Included in the acquisition amounts at September 30, 1996 is $1,735,000
placed in escrow as restricted cash, and a corresponding liability has been
included in accrued expenses in the accompanying balance sheet.
In 1994, the Company received a note receivable for the sale of the assets
of the voicemail operations in the amount of $424,497 from a related party.
(13) DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts of cash and cash equivalents, subscriber receivables,
accrued interest and other receivables, and accounts payable and accrued
expenses approximate fair value because of the short maturity of these items.
The estimated fair value of the Company's long-term debt at September 30, 1996
is $97,784,725, compared to its carrying value of $95,677,762. The estimated
fair value of the Company's long-term debt at December 31, 1995 is $54,595,646,
compared to its carrying value of $52,051,271. The fair value of long-term debt
is valued at future cash flows discounted using the current borrowing rate for
loans of a comparable maturity.
Fair value estimates are subject to inherent limitations. Estimates of fair
value are made at a specific point in time, based on relevant market information
and information about the financial instrument. The estimated fair values of
financial instruments presented above are not necessarily indicative of amounts
the Company might realize in actual market transactions. Estimates of fair value
are subjective in nature and involve uncertainties and matters of significant
judgment and therefore cannot be determined with precision. Changes in
assumptions could significantly affect the estimates.
(14) RELATED PARTY TRANSACTIONS
During 1994, in connection with the Company's decision to focus on its
wireless communications services, the Company completed a transaction to divest
its voicemail operation and assets to Mercury Information Technologies, Inc.
("MIT"), a company owned by certain of the Company's principal shareholders for
a sales price of $424,497. The carrying value of the assets sold was $165,204,
resulting in contributed capital of $259,293 reflected in the 1994 statement of
stockholders' equity.
During each of the three years ended December 31, 1995, and for the nine
months ended September 30, 1996 the Company has utilized certain bill processing
services of Cameron. The aggregate amounts paid to Cameron for such services
during the years ended December 31, 1993, 1994 and 1995 and for the nine months
ended September 30, 1996 totaled $552,448, $634,573, $1,049,607 and $1,294,699,
respectively.
The Company also purchases long distance services from Cameron pursuant to
an oral agreement and resells the service to the Company's customers. The
aggregate amounts paid to Cameron for such services during the years ended
December 31, 1993, 1994 and 1995, and for the nine months ended September 30,
1996 totaled $225,000, $228,000, $386,000 and $495,000, respectively.
During the year ended December 31, 1995 and the nine months ended September
30, 1996, the Company paid $154,000 and $216,000, respectively, to MIT for
voicemail services which the Company uses itself and also resells to its
cellular subscribers.
(15) SUBSEQUENT EVENTS
In January 1997 the Company issued 16,643.034544 shares of Class B Common
Stock in exchange for each outstanding share of Common Stock of the Company in a
reclassification of the Common Stock. The Company also changed its name from
Mercury, Inc. to US Unwired Inc. Accordingly, the accompanying financial
statements of the Company reflect the change of Company's name to US Unwired
Inc., and all share and per share amounts therein have been retroactively
adjusted to give effect to the reclassification of the Common Stock.
F-17
<PAGE> 88
US UNWIRED INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION FOR THE NINE MONTHS
ENDED SEPTEMBER 30, 1995 IS UNAUDITED)
In January 1997, the Company adopted the US Unwired Inc. 1997 Stock Option
Plan (the "Plan"), which provides for the grant of stock options and other
equity-based awards to key employees of the Company. The total number of shares
of Class A Common Stock which may be granted pursuant to the Plan is 1,400,000.
The Plan will terminate on the tenth anniversary of the effective date of the
Plan.
Option awards and the exercise price of options granted under the Plan will
be determined by the Compensation Committee of the Board of Directors, but may
not be less than 100% of the fair market value of the Class A Common Stock on
the date of the grant, and the term of the grant may not exceed 10 years from
the date of the grant. Options granted under the Plan will vest upon a proposed
sale of substantially all of the assets of the Company, or the merger of the
Company with or into another corporation. Options vest over a four-year period
commencing on the date of the grant and expire five years from the date of the
grant.
On or about December 1, 1996 the Company completed agreements with the
minority shareholders of MS 34 to acquire the remaining 49% of the outstanding
stock for approximately $11.6 million in cash, bringing the Company's ownership
of MS 34 to 100%. The agreement is contingent upon completion of the Company's
initial public offering, and will be funded with proceeds from the offering.
In December 1996, the FCC granted to the PCS Partnership the fifth C-block
license for which the PCS Partnership was the high bidder in the C-block auction
completed in May 1996.
In January 1997, the FCC concluded the D, E and F-block auction. Mobility
was the high bidder for 22 broadband PCS licenses for a total bid price of $9.5
million.
F-18
<PAGE> 89
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Miscellco Communications, Inc.:
We have audited the accompanying statements of operations, stockholders'
equity and cash flows of Miscellco Communications, Inc. for the year ended
December 31, 1994 and the four-month period ended April 30, 1995. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the results of operations and cash flows of Miscellco
Communications, Inc. for the year ended December 31, 1994 and the four-month
period ended April 30, 1995, in conformity with generally accepted accounting
principles.
KPMG Peat Marwick LLP
August 2, 1996
New Orleans, Louisiana
F-19
<PAGE> 90
The Board of Directors
Miscellco Communications, Inc.
Jackson, Mississippi
INDEPENDENT AUDITORS' REPORT
We have audited the accompanying statements of operations, stockholders'
equity and cash flows of Miscellco Communications, Inc. for the year ended
December 31, 1993. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the results of operations and cash flows of Miscellco
Communications, Inc. for the year ended December 31, 1993, in conformity with
generally accepted accounting principles.
SMITH, TURNER & REEVES
March 3, 1994
Jackson, Mississippi
F-20
<PAGE> 91
MISCELLCO COMMUNICATIONS, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEARS ENDED FOUR MONTHS
DECEMBER 31, ENDED
-------------------------- APRIL 30,
1993 1994 1995
----------- ---------- -----------
<S> <C> <C> <C>
Revenues:
Cellular service.................................... $ 3,124,105 $5,428,903 $ 2,224,085
Merchandise and installation sales.................. 610,311 562,119 132,280
----------- ---------- -----------
3,734,416 5,991,022 2,356,365
----------- ---------- -----------
Operating expenses:
System operations................................... 955,166 1,069,816 415,660
Cost of equipment and installation sales............ 752,310 874,094 357,433
Marketing and selling............................... 1,100,950 1,212,686 366,066
General and administrative.......................... 1,098,935 1,992,729 550,210
Depreciation and amortization....................... 486,889 683,197 249,736
----------- ---------- -----------
4,394,250 5,832,522 1,939,105
----------- ---------- -----------
Operating income (loss)............................... (659,834) 158,500 417,260
----------- ---------- -----------
Other income (expense):
Interest expense.................................... (403,235) (729,280) (317,680)
Other............................................... 13,455 1,402 843
----------- ---------- -----------
Total other expense......................... (389,780) (727,878) (316,837)
----------- ---------- -----------
Net income (loss)........................... $(1,049,614) $ (569,378) $ 100,423
=========== ========== ===========
</TABLE>
See accompanying notes to financial statements.
F-21
<PAGE> 92
MISCELLCO COMMUNICATIONS, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
ADDITIONAL
COMMON PAID-IN ACCUMULATED
STOCK CAPITAL DEFICIT TOTAL
--------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Balance at December 31, 1992............... $ 420,400 $2,827,948 $(3,452,492) $ (204,144)
Net loss................................... -- -- (1,049,614) (1,049,614)
Issuance of 22,105 shares of common
stock.................................... 22,105 359,006 -- 381,111
Exercise of stock options (note 2)......... 15,631 109,417 -- 125,048
--------- ----------- ----------- -----------
Balance at December 31, 1993............... 458,136 3,296,371 (4,502,106) (747,599)
Net loss................................... -- -- (569,378) (569,378)
Exercise of stock options (note 2)......... 4,981 61,705 -- 66,686
Repurchase and retirement of 102,956 shares
of common stock.......................... (102,956) (692,565) (2,954,479) (3,750,000)
--------- ----------- ----------- -----------
Balance at December 31, 1994............... 360,161 2,665,511 (8,025,963) (5,000,291)
Net income................................. -- -- 100,423 100,423
--------- ----------- ----------- -----------
Balance at April 30, 1995.................. $ 360,161 $2,665,511 $(7,925,540) $(4,899,868)
========= =========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
F-22
<PAGE> 93
MISCELLCO COMMUNICATIONS, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED FOUR MONTHS
DECEMBER 31, ENDED
--------------------------- APRIL 30,
1993 1994 1995
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss).................................. $(1,049,614) $ (569,378) $ 100,423
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Depreciation and amortization................... 486,889 683,197 249,736
Compensation expense for employee stock options
exercised..................................... 109,417 61,705 --
(Gain) loss on sale of assets................... (10,265) 862 --
Increase in allowance for uncollectible
accounts...................................... 8,000 13,000 5,000
Changes in operating assets and liabilities:
Receivables................................... (312,662) (322,223) (269,167)
Inventory..................................... (82,787) (106,718) 152,399
Prepaid expenses.............................. (108,170) 70,018 73,041
Other assets.................................. (319) (1,778) 18
Accounts payable.............................. 396,975 (271,529) (197,843)
Customer deposits and advance billings........ 166,724 91,669 32,380
Accrued expenses.............................. (21,672) 158,115 (114,582)
----------- ----------- ---------
Net cash provided by (used in) operating
activities............................... (417,484) (193,060) 31,405
----------- ----------- ---------
Cash flows from investing activities:
Purchases of property and equipment................ (592,253) (1,944,641) (450,505)
Disposals of property and equipment................ 352,352 3,514 --
Acquisition of intangible assets................... (12,631) (594,392) (7,608)
----------- ----------- ---------
Net cash used in investing activities...... (252,532) (2,535,519) (458,113)
----------- ----------- ---------
Cash flows from financing activities:
Proceeds from issuance of long-term debt........... 558,144 11,393,588 355,000
Principal payments on long-term debt............... (210,962) (4,835,245) (33,334)
Proceeds from issuance of common stock............. 381,111 4,981 --
Payments to repurchase common stock................ -- (3,750,000) --
----------- ----------- ---------
Net cash provided by financing
activities............................... 728,293 2,813,324 321,666
Net increase (decrease) in cash and cash
equivalents.............................. 58,277 84,745 (105,042)
Cash and cash equivalents, beginning of period....... 13,420 71,697 156,442
----------- ----------- ---------
Cash and cash equivalents, end of period............. $ 71,697 $ 156,442 $ 51,400
=========== =========== =========
Cash payments for interest........................... $ 379,938 $ 641,827 $ 354,873
=========== =========== =========
</TABLE>
See accompanying notes to financial statements.
F-23
<PAGE> 94
MISCELLCO COMMUNICATIONS, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1993 AND 1994
AND THE FOUR-MONTH PERIOD ENDED APRIL 30, 1995
(1) DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Description of Business
Miscellco Communications, Inc. (the Company) owns and operates cellular
telephone service in the following rural service areas (RSAs) of Kansas and
Oklahoma: KS1, KS2, KS6, KS7, KS11, KS12, KS13 and OK1. The RSAs are
geographically outlined by the Federal Communications Commission (FCC). In 1989
through 1994 the Company was awarded the non-wireline A band rights and given
construction permits to construct the above RSAs in compliance with FCC
regulations and guidelines. The OK1 RSA is operated under an interim operating
authority granted by the FCC.
Effective April 30, 1995, the assets of the Company were sold to Mercury
Cellular of Kansas, Inc. (Mercury), a Louisiana corporation for a purchase price
of $35,895,663. The accompanying financial statements reflect the results of
operations of the Company for the respective periods prior to the sale of the
Company's assets to Mercury.
(b) Property and Equipment
Property and equipment are stated at cost and include, among other items,
the cost of transmission equipment, structures and installation equipment.
Depreciation is calculated on a straight-line basis over the estimated useful
lives of the assets. Routine maintenance and repairs are charged to operating
expense while costs of betterments and renewals are capitalized.
(c) Intangible Assets
Intangible assets consist primarily of costs incurred in connection with
the Company's acquisition of cellular licenses. These assets are recorded at
cost and amortized using the straight-line method over a ten year period.
(d) Inventory
Inventory consists of cellular telephones and equipment held for resale and
is stated at the lower of average cost or market.
(e) Revenue Recognition
The Company earns revenue by providing access to the cellular network and
for usage of the cellular network. Access revenue is billed one month in advance
and is recognized when earned. Usage revenue is recognized when the service is
rendered. Both access and usage revenues are classified as cellular service
revenues in the accompanying statements of operations. Revenues from the sale
and installation of merchandise is recognized when merchandise is delivered.
(f) Income Taxes
No income taxes have been provided as the stockholders of the Company
elected to file as an S-corporation.
(g) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the
F-24
<PAGE> 95
MISCELLCO COMMUNICATIONS, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
(h) Cash and Cash Equivalents
Cash and cash equivalents include cash on deposit and money market mutual
funds.
(2) STOCKHOLDERS' EQUITY
In March 1991, the Company adopted stock option plans (the Plans) for two
key employees. The Plans, as amended, provided the right and option to acquire
37,051 shares of the Company's common stock. The exercise price of the options
granted under the plan was $1 per share. Effective August 24, 1994, the plans
were amended and terminated resulting in the issuance of the final 4,981 shares
to be issued under the plan. During 1993 and 1994, 15,631 and 4,981 shares of
common stock were issued under the plan with related compensation expense of
$109,417 and $61,705, respectively.
(3) OPERATING LEASES
The Company leases equipment, towers and office space under operating
leases having expiration dates 1995 through 2003. Generally, the Company is
responsible for executory costs such as maintenance and taxes. The minimum
future rental payments under the noncancelable operating leases for each of the
succeeding five years and in the aggregate follow:
<TABLE>
<S> <C>
1995.............................................. $106,100
1996.............................................. 68,445
1997.............................................. 63,034
1998.............................................. 62,616
1999.............................................. 62,616
Thereafter........................................ 189,098
--------
$551,909
========
</TABLE>
Rental expense associated with the operating leases was $202,236, $249,061
and $108,048 for the years ended December 31, 1993 and 1994, and for the
four-month period ended April 30, 1995, respectively. Management anticipates
that these leases will be renewed or replaced upon expiration.
F-25
<PAGE> 96
INDEPENDENT AUDITORS' REPORT
The Board of Directors
West Alabama Cellular Telephone Company, Inc.:
We have audited the accompanying balance sheets of West Alabama Cellular
Telephone Company, Inc. as of December 31, 1995 and May 15, 1996, and the
related statements of operations, stockholders' equity (deficit) and cash flows
for the year ended December 31, 1995 and the period from January 1, 1996 to May
15, 1996. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of West Alabama Cellular
Telephone Company, Inc. as of December 31, 1995 and May 15, 1996, and the
results of its operations and cash flows for the year ended December 31, 1995
and the period from January 1, 1996 to May 15, 1996 in conformity with generally
accepted accounting principles.
KPMG Peat Marwick LLP
New Orleans, Louisiana
August 16, 1996
F-26
<PAGE> 97
WEST ALABAMA CELLULAR TELEPHONE COMPANY, INC.
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31, MAY 15,
1995 1996
------------ ----------
<S> <C> <C>
Current assets:
Cash and cash equivalents........................................ $ 568,756 739,044
Subscriber receivables (less allowance for doubtful accounts of
$85,500 and $11,813 at December 31, 1995 and May 15, 1996,
respectively)................................................. 399,143 567,392
Inventory........................................................ 88,262..... 54,160
Prepaid expenses................................................. 11,319 5,538
---------- ----------
Total current assets..................................... 1,067,480 1,366,134
Property and equipment, net........................................ 1,447,612 1,364,882
Other assets....................................................... 7,302 4,564
---------- ----------
Total assets............................................. $2,522,394 2,735,580
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Current portion of vendor note payable........................... 300,564 300,564
Note payable to affiliate........................................ 300,000 300,000
Accounts payable................................................. 218,644 183,397
Accrued expenses................................................. 165,746 146,481
---------- ----------
Total current liabilities................................ 984,954 930,442
---------- ----------
Long-term vendor note payable...................................... 1,577,973 1,427,691
Stockholders' equity (deficit):
Common stock, $1 par value, 5,000 shares authorized, 1,150 issued
and outstanding at December 31, 1995 and May 15, 1996,
respectively.................................................. 1,150 1,150
Additional paid-in capital....................................... 61,963 61,963
Retained earnings (deficit)...................................... (103,646) 314,334
---------- ----------
Total stockholders' equity (deficit)..................... (40,533) 377,447
---------- ----------
Commitments and contingencies
Total liabilities and stockholders' equity (deficit)..... $2,522,394 2,735,580
========== ==========
</TABLE>
See accompanying notes to financial statements.
F-27
<PAGE> 98
WEST ALABAMA CELLULAR TELEPHONE COMPANY, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
PERIOD FROM
YEAR ENDED JANUARY 1,
DECEMBER 31, 1996 TO MAY
1995 15, 1996
------------ -----------
<S> <C> <C>
Revenues:
Cellular service................................................. $3,226,218 1,541,434
Merchandise sales................................................ 114,029 52,939
Miscellaneous.................................................... 25,634 46,589
---------- ----------
3,365,881 1,640,962
---------- ----------
Operating expenses:
Cost of service.................................................. 854,388 339,173
Merchandise cost of sales........................................ 336,664 154,728
Sales and marketing.............................................. 72,490 36,788
General and administrative....................................... 908,112 521,073
Bad debt expense................................................. 220,896 7,969
Depreciation and amortization.................................... 252,400 102,265
---------- ----------
2,644,950 1,161,996
---------- ----------
Operating income......................................... 720,931 478,966
---------- ----------
Other (income) expense:
Interest expense................................................. 213,998 69,995
Interest income.................................................. (43,737) (9,009)
Gain on sale of assets........................................... (333) --
---------- ----------
Total other expense...................................... 169,928 60,986
---------- ----------
Net income............................................... $ 551,003 417,980
========== ==========
</TABLE>
See accompanying notes to financial statements.
F-28
<PAGE> 99
WEST ALABAMA CELLULAR TELEPHONE COMPANY, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
ADDITIONAL
COMMON PAID-IN RETAINED
STOCK CAPITAL EARNINGS TOTAL
------ ---------- -------- --------
<S> <C> <C> <C> <C>
Balance at January 1, 1995.......................... $1,150 61,963 (319,128) (256,015)
Net income.......................................... -- -- 551,003 551,003
Distributions....................................... -- -- (335,521) (335,521)
------ ------ -------- --------
Balance at December 31, 1995........................ 1,150 61,963 (103,646) (40,533)
Net income.......................................... -- -- 417,980 417,980
------ ------ -------- --------
Balance at May 15, 1996............................. $1,150 61,963 314,334 377,447
====== ====== ======== ========
</TABLE>
See accompanying notes to financial statements.
F-29
<PAGE> 100
WEST ALABAMA CELLULAR TELEPHONE COMPANY, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
PERIOD FROM
JANUARY 1,
YEAR ENDED 1996 TO
DECEMBER 31, MAY 15,
1995 1996
------------ -----------
<S> <C> <C>
Cash flows from operating activities:
Net income...................................................... $ 551,003 417,980
Adjustments to reconcile net income to net cash provided by
(used in) operating activities:
Depreciation and amortization................................ 252,400 102,265
Gain on sale of assets....................................... (333) --
Changes in operating assets and liabilities:
Subscriber receivables..................................... (83,869) (168,249)
Inventory.................................................. 20,163 34,102
Prepaid expenses........................................... (3,116) 5,781
Accounts payable........................................... 128,393 (35,247)
Accrued expenses........................................... 10,175 (19,265)
---------- ----------
Net cash provided by operating activities............... 874,816 337,367
---------- ----------
Cash flows from investing activities:
Proceeds from sale of equipment................................. 7,000 --
Capital expenditures............................................ (789,517) (16,797)
---------- ----------
Net cash used in investing activities................... (782,517) (16,797)
---------- ----------
Cash flows from financing activities:
Principal payments on note payable.............................. (226,737) (150,282)
Distributions to shareholders................................... (335,521) --
Proceeds from note payable to affiliate......................... 300,000 --
---------- ----------
Net cash flows used in financing activities............. (262,258) (150,282)
---------- ----------
Net increase (decrease) in cash and cash equivalents.............. (169,959) 170,288
Beginning cash and cash equivalents............................... 738,715 568,756
---------- ----------
Ending cash and cash equivalents.................................. $ 568,756 739,044
========== ==========
</TABLE>
See accompanying notes to financial statements.
F-30
<PAGE> 101
WEST ALABAMA CELLULAR TELEPHONE COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS
(1) DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Description of Organization
West Alabama Cellular Telephone Company, Inc. (the Company) was
incorporated on February 2, 1991 under the laws of Alabama. The Company provides
cellular telephone service to the general public and commercial customers in the
Demopolis, Fayette, and Marengo, Alabama area.
On May 15, 1996, the Company sold substantially all of its assets to
Mississippi One Cellular Telephone Company for $17,870,000. The assets sold
included the cellular licenses for the Rural Service Area known as Alabama 3,
the related system subscribers, permits and authorizations, and certain personal
property used in the operation of the system. The accompanying financial
statements reflect the financial position and results of operations of the
Company as of and for the period immediately prior to the sale of the assets to
Mississippi One Cellular Telephone Company.
(b) Inventory
Inventory consists of cellular telephone equipment for sale in the course
of the Company's activities and is valued using the lower of cost, on a
first-in, first-out basis, or market.
(c) Property and equipment
Property and equipment are stated at cost. Depreciation is being provided
by the straight-line and accelerated methods over the estimated useful lives of
the assets as follows:
<TABLE>
<S> <C>
Cellular equipment.................................. 5 to 15 years
Buildings........................................... 15 to 31 years
Automobiles......................................... 5 years
Office equipment.................................... 5 to 7 years
</TABLE>
Routine maintenance and repairs are charged to operating expense while
costs of betterments and renewals are capitalized.
(d) Revenue Recognition
The Company earns revenue by providing access to its cellular network and
for usage of the cellular network. Access revenue is billed one month in advance
and is recognized when earned. Usage revenue is recognized when the service is
rendered. Both access and usage revenues are classified as cellular service
revenues in the accompanying statements of operations. Revenues from the sale
and installation of merchandise is recognized when merchandise is delivered.
(e) Commissions
Commissions are paid to sales agents for customer activations and are
recognized in the month the customer is activated within the cellular system.
(f) Income Taxes
The Company is an S-Corporation for federal and state income tax reporting
purposes. Federal and state income taxes are paid by the stockholders on their
respective share of the Company's income.
F-31
<PAGE> 102
WEST ALABAMA CELLULAR TELEPHONE COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(g) Cash Flow Information
The Company considers all short-term investments with remaining maturities
of three months or less to be cash equivalents.
Cash paid for interest for the year ended December 31, 1995 and the period
from January 1, 1996 to May 15, 1996 was $200,125 and $90,631, respectively.
(h) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
(2) PROPERTY AND EQUIPMENT
Major categories of property and equipment are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, MAY 15,
1995 1996
------------ -----------
<S> <C> <C>
Cellular equipment........................................ $ 2,506,422 $ 2,519,467
Buildings................................................. 109,194 109,194
Automobiles............................................... 20,481 20,481
Office equipment.......................................... 48,770 52,521
----------- -----------
2,684,867 2,701,663
Less accumulated depreciation........................... (1,237,255) (1,336,781)
----------- -----------
$ 1,447,612 $ 1,364,882
=========== ===========
</TABLE>
(3) NOTE PAYABLE
The note payable is to the Company's principal supplier of equipment used
to construct the cellular telephone system. The funds advanced were used for
acquisition of equipment and services and working capital. The principal amount
of the note is due in quarterly payments of $75,141 over a seven-year period
beginning three years after the date of conditional acceptance which was in
December 1991. Interest is payable quarterly, in addition to any principal
amounts due, and is calculated at 1.25% per annum in excess of the Corporate
Base Rate of Chase Manhattan Bank in effect on the first day of each calendar
quarter. The interest rate on the note is 9.0% as of May 15, 1996.
Subsequent to May 15, 1996, the unpaid principal balance was paid in full
with proceeds received from the sale of the assets of the Company.
(4) OPERATING LEASES
The Company is obligated under several noncancelable operating lease
commitments having remaining terms in excess of one year. The annual minimum
lease payments under noncancelable operating leases as of May 15, 1996, are as
follows:
<TABLE>
<S> <C>
1997............................................... $38,260
1998............................................... 28,740
1999............................................... 21,665
2000............................................... 5,950
</TABLE>
F-32
<PAGE> 103
WEST ALABAMA CELLULAR TELEPHONE COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Rental expense under the operating leases was $34,116 and $14,161 for the
year ended December 31, 1995 and the period from January 1, 1996 to May 15,
1996, respectively. Management anticipates these leases will be renewed or
replaced upon expiration.
(5) CONCENTRATION OF CREDIT RISK
Financial instruments which potentially expose the Company to
concentrations of credit risk, as defined by Financial Accounting Standards
Board Statement No. 105, consist primarily of cash and accounts receivable. The
Company places its cash and temporary cash investments with high credit quality
financial services companies. Collectibility of subscriber accounts receivable
is impacted by economic trends in each of the Company's markets and the Company
has provided an allowance which it believes is adequate to absorb losses from
uncollectible accounts.
(6) RELATED PARTY TRANSACTIONS
The Company has a note payable in the amount of $300,000 to a company that
is 100% owned by the Company's shareholders as of December 31, 1995 and May 15,
1996. The terms of the note call for interest at the rate of 5% with the
principal balance to be paid on January 14, 1997. Accrued interest on the note
as of December 31, 1995 and May 15, 1996 was $15,000 and $20,625, respectively.
(7) DISCLOSURE ABOUT FAIR VALUE
The carrying amounts of financial instruments approximate fair value
principally because of the short maturity or variable interest rate of the
instruments. Fair value estimates are subject to inherent limitations. Estimates
of fair value are made at a specific point in time, based on relevant market
information and information about the financial instrument. The estimated fair
values of financial instruments presented above are not necessarily indicative
of amounts the Company might realize in actual market transactions. Estimates of
fair value are subjective in nature and involve uncertainties and matters of
significant judgment and therefore cannot be determined with precision. Changes
in assumptions could significantly affect the estimates.
F-33
<PAGE> 104
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Alabama 4 System:
We have audited the accompanying balance sheet of Alabama 4 System as of
June 30, 1996, and the related statements of operations, stockholders' equity
(deficit), and cash flows for the period from October 1, 1995 to November 6,
1995 and the period from November 7, 1995 to June 30, 1996. These financial
statements are the responsibility of the System's management. Our responsibility
is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Alabama 4 System as of June
30, 1996, and the results of its operations and its cash flows for the period
from October 1, 1995 to November 6, 1995 and the period from November 7, 1995 to
June 30, 1996, in conformity with generally accepted accounting principles.
As discussed in note 1 to the financial statements, on November 7, 1995,
PriCellular and its wholly owned subsidiary Northland Cellular purchased certain
assets of the Alabama 4 System in a business combination accounted for as a
purchase. As a result of the acquisition, financial information for the period
after November 6, 1995 is presented on a different cost basis than that for the
periods before November 6, 1995 and, therefore, such information is not
comparable.
KPMG Peat Marwick LLP
New Orleans, Louisiana
September 18, 1996
F-34
<PAGE> 105
INDEPENDENT AUDITORS' REPORT
Dominion Cellular, Inc.
Clanton, Alabama
We have audited the accompanying balance sheet of Dominion Cellular, Inc.
(Alabama 4 System) as of September 30, 1995, and the statements of operations,
stockholders' equity (deficit), and cash flows for the years ended September 30,
1994 and 1995. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Dominion Cellular, Inc.
(Alabama 4 System) as of September 30, 1995, and the results of its operations
and its cash flow for the years ended September 30, 1994 and 1995, in conformity
with generally accepted accounting principles.
Elliot H. Goldberg, CPA, P.C.
Rockville Centre, N.Y.
December 16, 1995
F-35
<PAGE> 106
ALABAMA 4 SYSTEM
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
SEPTEMBER 30, JUNE 30,
1995 1996
------------- -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents..................................... $ 322,057 $ 44,033
Subscriber receivables (less allowance for doubtful accounts
of $133,070 and $77,734 at September 30, 1995 and June 30,
1996,
respectively).............................................. 808,780 634,866
Receivable from parent........................................ 2,100,000 2,470,978
Receivable from affiliates.................................... -- 412,632
Inventory..................................................... 43,535 79,287
Prepaid expenses and other.................................... 33,592 5,216
---------- ----------
Total current assets.................................. 3,307,964 3,647,012
Property and equipment, net..................................... 4,007,474 3,736,719
Cellular telephone license costs, net of accumulated
amortization of $103,839 and $357,395 at September 30, 1995
and June 30, 1996, respectively............................... 28,284 21,215,502
---------- ----------
Total assets.......................................... $ 7,343,722 $28,599,233
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.............................................. $ 288,877 $ 279,516
Accrued expenses and other liabilities........................ 263,358 82,578
Payable to affiliates......................................... -- 659,441
Payable to parent............................................. 1,019,537 --
Current maturities of long-term debt.......................... 4,986,057 --
---------- ----------
Total current liabilities............................. 6,557,829 1,021,535
Stockholders' equity:
Common stock, $.001 par value, 50,000 shares authorized,
issued and outstanding at September 30, 1995............... 50 --
Common stock, $.01 par value, 1,000 shares authorized, 100
shares issued and outstanding at June 30, 1996............. -- 1
Additional paid-in capital.................................... 50,050 26,817,177
Retained earnings............................................. 735,793 760,520
---------- ----------
Total stockholders' equity............................ 785,893 27,577,698
Commitments and contingencies
---------- ----------
Total liabilities and stockholders' equity............ $ 7,343,722 $28,599,233
========== ==========
</TABLE>
See accompanying notes to financial statements.
F-36
<PAGE> 107
ALABAMA 4 SYSTEM
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED
SEPTEMBER 30, OCTOBER 1, 1995 NOVEMBER 7, 1995
----------------------- TO TO
1994 1995 NOVEMBER 6, 1995 JUNE 30, 1996
---------- ---------- ---------------- ----------------
<S> <C> <C> <C> <C>
Revenues:
Cellular service:
Subscriber.................... $ 881,364 $1,268,938 $143,770 $1,858,815
Roaming....................... 2,126,971.. 3,357,745 401,796 1,833,219
Merchandise sales................ 147,725 150,985 7,654 60,049
Other revenue.................... 28,997 115,912 2,636 15,300
---------- --------- ------- ---------
3,185,057 4,893,580 555,856 3,767,383
---------- --------- ------- ---------
Operating expenses:
Cost of service.................. 752,245 1,420,857 176,948 896,420
Merchandise cost of sales........ 251,744 351,395 26,794 291,890
General and administrative....... 807,529 665,985 92,898 358,070
Sales and marketing.............. 116,967 185,400 21,383 251,405
Depreciation and amortization.... 336,643 454,953 45,495 756,648
---------- --------- ------- ---------
2,265,128 3,078,590 363,518 2,554,433
---------- --------- ------- ---------
Operating income................... 919,929 1,814,990 192,338 1,212,950
Other expense -- interest.......... 306,007 460,476 185,076 --
---------- --------- ------- ---------
Income before income taxes......... 613,922 1,354,514 7,262 1,212,950
Income tax provision............... -- 437,720 2,709 452,430
---------- --------- ------- ---------
Net income......................... $ 613,922 $ 916,794 $ 4,553 $ 760,520
========== ========= ======= =========
</TABLE>
See accompanying notes to financial statements.
F-37
<PAGE> 108
ALABAMA 4 SYSTEM
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
ADDITIONAL RETAINED
COMMON PAID-IN EARNINGS
STOCK CAPITAL (DEFICIT) TOTAL
------ ----------- --------- -----------
<S> <C> <C> <C> <C>
Balance at October 1, 1993..................... $ 50 $ 50,050 $(794,923) $ (744,823)
Net income for year............................ -- -- 613,922 613,922
---- ----------- --------- -----------
Balance at September 30, 1994.................. 50 50,050 (181,001) (130,901)
Net income for year............................ -- -- 916,794 916,794
---- ----------- --------- -----------
Balance at September 30, 1995.................. 50 50,050 735,793 785,893
Net income for period October 1, 1995 to
November 6, 1995............................. -- -- 4,553 4,553
---- ----------- --------- -----------
Balance at November 6, 1995.................... 50 50,050 740,346 790,446
Elimination of Dominion equity................. (50) (50,050) (740,346) (790,446)
Investment of PriCellular...................... 1 26,817,177 -- 26,817,178
Net income for period November 7, 1995 to
June 30, 1996................................ -- -- 760,520 760,520
---- ----------- --------- -----------
Balance at June 30, 1996....................... $ 1 $26,817,177 $ 760,520 $27,577,698
==== =========== ========= ===========
</TABLE>
See accompanying notes to financial statements.
F-38
<PAGE> 109
ALABAMA 4 SYSTEM
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED
SEPTEMBER 30 OCTOBER 1, 1995 NOVEMBER 7, 1995
-------------------------- TO TO
1994 1995 NOVEMBER 6, 1995 JUNE 30, 1996
----------- ----------- ---------------- ----------------
<S> <C> <C> <C> <C>
Cash flows from operating
activities:
Net income...................... $ 613,922 $ 916,794 $ 4,553 $ 760,520
Adjustments to reconcile net
income to net cash provided
by (used in) operating
activities:
Depreciation and
amortization............... 336,643 454,953 45,495 756,648
Bad debt provision........... 134,000 (82,140) -- --
Changes in operating assets
and liabilities:
(Increase) decrease in:
Subscriber
receivables........... (413,924) (232,525) (168,281) (357,654)
Inventory............... (40,739) 24,897 -- (47,010)
Prepaid expenses and
other................. (13,318) (4,607) (200) 7,127
Receivable from parent
and affiliates........ 288,906 (2,100,000) -- (1,558,720)
Increase (decrease) in:
Accounts payable,
accrued expenses and
other liabilities..... 403,343 (101,967) (60,314) (235,997)
Payable to parent....... -- 753,034 (35,291) --
Payable to affiliate.... -- -- -- 659,441
----------- ----------- ---------- ------------
Net cash provided by (used
in) operating activities... 1,308,833 (371,561) (214,038) (15,645)
----------- ----------- ---------- ------------
Cash flows from investing
activities:
Capital expenditures............ (1,406,510) (1,154,793) (4,886) (60,264)
Acquisition of Alabama 4 RSA.... -- -- -- 16,809
----------- ----------- ---------- ------------
Net cash used in investing
activities................. (1,406,510) (1,154,793) (4,886) (43,455)
----------- ----------- ---------- ------------
Cash flows from financing
activities:
Proceeds from issuance of
long-term debt............... 55,441 2,000,000 -- --
Principal payments on long-term
debt......................... -- (299,272) -- --
----------- ----------- ---------- ------------
Net cash provided by
financing activities....... 55,441 1,700,728 -- --
----------- ----------- ---------- ------------
Net increase (decrease) in
cash....................... (42,236) 174,374 (218,924) (59,100)
Cash at beginning of period....... 189,919 147,683 322,057 103,133
----------- ----------- ---------- ------------
Cash at end of period............. $ 147,683 $ 322,057 $ 103,133 $ 44,033
=========== =========== ========== ============
Supplemental disclosure of cash
flow information -- cash payment
for interest.................... $ 306,007 $ 345,079 $ 246,954 $ --
=========== =========== ========== ============
</TABLE>
See accompanying notes to financial statements.
F-39
<PAGE> 110
ALABAMA 4 SYSTEM
NOTES TO FINANCIAL STATEMENTS
(1) DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Background and Basis of Presentation
The accompanying financial statements reflect the historical financial
position, results of operations and cash flows of the assets and liabilities
comprising the wireless communication system in the Bibb County, Alabama, Rural
Service Area ("RSA") Alabama 4 ("the System"). Until November 7, 1995, the
assets and liabilities comprising the System were owned by Dominion Cellular,
Inc. ("Dominion"), a wholly owned subsidiary of Dominion Resources, Inc.
Accordingly, the financial statements as of September 30, 1995 and for the
years ended September 30, 1994 and 1995 and the period from October 1, 1995 to
November 6, 1995 reflects Dominion's historical cost of the assets and
liabilities comprising the System.
On November 7, 1995, PriCellular and its wholly owned subsidiary Northland
Cellular ("PriCellular") purchased for approximately $25,300,000 the cellular
assets comprising the System from Dominion (see note 7). PriCellular accounted
for the acquisition as a purchase and, accordingly, established a new cost basis
with respect to the assets purchased from Dominion.
The financial information as of June 30, 1996 and for the period from
November 7, 1995 to June 30, 1996 reflects PriCellular's historical cost of the
assets and liabilities comprising the System. As a result of the acquisition and
the different cost basis with respect to the assets and liabilities comprising
the System, financial information for periods before and after November 7, 1995
are not comparable.
On July 1, 1996, Mercury, Inc. purchased substantially all of the System's
assets from PriCellular for approximately $27,500,000. The assets acquired
included the licenses in the RSA known as Alabama 4, the related system
subscribers, permits and authorization, and certain personal property used in
the operation of the system.
(b) Cash and Cash Equivalents
For purposes of the statement of cash flows, the System considers all
temporary cash investments with original maturities of three months or less to
be cash and cash equivalents.
(c) Inventory
Inventory is stated at the lower of cost or market. Cost is determined by
the first-in, first-out method. Inventory consists principally of cellular
telephones and related accessories.
(d) Property and Equipment
Property and equipment is stated at cost and depreciated on a straight-line
basis over the estimated useful lives of the assets as follows:
<TABLE>
<S> <C>
Buildings and leasehold improvements.................... 30 years
Operating equipment..................................... 10 years
Furniture and fixtures.................................. 7 years
</TABLE>
Routine maintenance and repairs are charged to operating expense while costs of
betterments and renewals are capitalized.
(e) Cellular Licenses and Other Assets
Cellular telephone license costs prior to November 7, 1995, represent
expenses incurred by the System for the acquisition of site locations, zoning
approvals, and technical and other expenses related to construction and
obtaining the necessary approvals and licenses to operate and preparing to
operate a cellular telephone
F-40
<PAGE> 111
ALABAMA 4 SYSTEM
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
system. These costs are capitalized and are amortized through charges to
operations over their estimated useful lives, currently estimated to be five
years.
Cellular licenses recorded in connection with the acquisition of the system
on November 7, 1995 are recorded at cost and amortized using the straight-line
method over the assets estimated useful lives, 40 years. The System annually
evaluates the propriety of the carrying values of its cellular licenses using
estimated undiscounted future cash flows of the market to which the license
relates, and estimates of the market value of the cellular systems to determine
whether current events or circumstances warrant adjustments to reduce the
carrying amounts to fair value. There have been no such reductions through June
30, 1996.
(f) Revenue Recognition
The System earns revenue by providing access to and usage of the cellular
network and sales of cellular merchandise. Access revenue is billed one month in
advance and is recognized when earned. Usage revenue is recognized when the
service is rendered. Both access and usage revenues are classified as service
revenues in the accompanying statements of operations. Revenues from the sale
and installation of merchandise is recognized when the merchandise is delivered.
(g) Commissions
Commissions are paid to sales agents for customer activations and are
recognized in the month the customer is activated within the cellular system.
(h) Income Taxes
The System accounts for income taxes using the asset and liability method,
under which deferred tax assets and liabilities are recognized for the future
tax consequences attributable to differences between the financial statement
carrying amounts of assets and liabilities and their respective tax bases.
Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.
The System is included in the consolidated federal income tax return of
Dominion Resources, Inc. and PriCellular for the respective periods of
ownership. An income tax provision is reflected in the System's separate
financial statements based on applicable statutory rates. Amounts to be settled
among members of the group are included in amounts payable to parent in the
accompanying balance sheet. The related payables to parent were $437,720 and
$452,430 at September 30, 1995 and June 30, 1996, respectively.
The principal temporary difference between the basis of assets and
liabilities for financial reporting and tax purposes relates to operating losses
incurred prior to 1993. Net deferred tax assets related to such differences were
offset by a valuation allowance. The valuation allowance was reduced during 1994
and 1995 in the amounts of $233,000 and $69,000, respectively, which accounts
for the difference between the actual effective tax rate and the expected tax
rate for 1994 and 1995.
(i) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from these estimates.
F-41
<PAGE> 112
ALABAMA 4 SYSTEM
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(2) PROPERTY AND EQUIPMENT
Major categories of property and equipment are as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30, JUNE 30,
1995 1996
------------- ---------
<S> <C> <C>
Operating equipment......................................... $ 3,245,769 4,029,379
Cell site preparation and equipment......................... 1,764,489 --
Furniture and fixtures...................................... 117,459 106,592
----------- ---------
5,127,717 4,135,971
Less accumulated depreciation and amortization.............. (1,120,243) (399,252)
----------- ---------
$ 4,007,474 3,736,719
=========== =========
</TABLE>
(3) LONG-TERM DEBT
Long-term debt at September 30, 1995 includes notes payable to Motorola,
Inc. ("Motorola") in the amount of $2,986,057. The System entered into a
Cellular System Purchase Agreement with Motorola ("Purchase Agreement") pursuant
to which the System purchased and Motorola designed, manufactured, and produced
specified cellular fixed network equipment together with expansion products,
hardware, and software products and related services. Pursuant to the Purchase
Agreement, Motorola assisted in the construction and implementation of the
system.
Motorola agreed to lend up to $1,650,000 to purchase equipment and services
to be provided primarily by Motorola for construction and installation of the
cellular telephone system and up to $950,000 for working capital. All such loans
were repayable interest only until the third year after Dominion placed the
cellular telephone system into commercial service and then paid over a four year
period on a seven year amortization schedule. Interest was calculated at the
rate of 3% per annum in excess of the Chase Manhattan Bank's Corporate Base
Rate, which was 9% at September 30, 1995. Dominion has the right to repay such
loans in whole or in part and the Financing Agreement also provides for certain
mandatory prepayments including prepayments equal to 75% of Dominion's "Free
Cash Flow" (operating cash flow less non-financed capital purchases and debt
service).
The Financing Agreement required the parent Company (Dominion Resources) to
execute a Stock Pledge Agreement pledging all of the issued and outstanding
capital stock of Dominion with Motorola as collateral. As additional collateral,
Dominion has assigned all of its cell site, tower, and building leases to
Motorola together with a security interest in all of its tangible and intangible
assets. The Financing Agreement contains certain financial covenants and
restrictions on the payment of dividends, which Dominion has complied with.
In conjunction with the sale of the System's cellular telephone system, the
outstanding indebtedness to Motorola was paid from proceeds of the sale which
took place in November 1995.
In anticipation of the execution of the Asset Purchase Agreement,
PriCellular extended a $2,000,000 loan to the System on April 7, 1995. From the
$2,000,000 of loan proceeds, the System (1) made a $1,417,598 loan to an entity
of which the System's principal stockholder is a creditor; (2) paid $250,000 to
a corporation owned by the System's president and her husband in payment of
bills rendered for previously completed cell site and tower construction for the
System; and (3) prepaid $125,000 of indebtedness owed to an entity owned by
members of the principal stockholder's immediate family. The balance was applied
to legal and professional fees related to the sale of the System. The $2,000,000
loan was repaid with interest at 8% from proceeds of the sale of the System
which took place in November 1995.
F-42
<PAGE> 113
ALABAMA 4 SYSTEM
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(4) COMMITMENTS AND CONTINGENCIES
The Company is obligated under several noncancelable operating lease
commitments having remaining terms in excess of one year. Future minimum lease
payments due under these leases as of June 30, 1996 are as follows:
<TABLE>
<S> <C>
1997............................................................... $10,500
1998............................................................... 6,000
1999............................................................... 2,600
2000............................................................... 2,400
2001............................................................... 2,000
</TABLE>
Rental expense related to other operating leases were $72,000, $101,100,
$5,800 and $23,800 for the years ended September 30, 1994 and 1995 the period
from October 1, 1995 to November 6, 1995 and the period from November 7, 1995 to
June 30, 1996, respectively.
(5) CONCENTRATIONS OF CREDIT RISK
Financial instruments which potentially expose the Company to
concentrations of credit risk, as defined by Financial Accounting Standards
Board Statement No. 105, consist primarily of cash and accounts receivable. All
deposits in demand deposit accounts are within existing FDIC insurance levels.
The Company has not experienced any losses on its deposits. Subscriber accounts
receivable collectibility is impacted by economic trends in each of the
Company's markets. Such receivables are typically collected between thirty and
sixty days.
(6) RELATED PARTY TRANSACTIONS
At September 30, 1995, Dominion has $581,817 included in due to parent
related to funds provided during the fiscal year in connection with new cell
site equipment purchases.
Effective August 1, 1995, PriCellular became the manager of the System
pursuant to a management agreement providing for a management fee to be paid to
PriCellular equal to 7% of the gross revenues of the System during the term of
the management agreement. Through November 7, 1995, the Company accrued $114,600
in connection with the management agreement.
(7) PURCHASE OF ASSETS FROM DOMINION BY PRICELLULAR
On November 7, 1995 the sale of the System from Dominion was recorded and
payable by PriCellular in cash and stock for approximately $25,300,000. The cash
portion of the purchase price received by Dominion was reduced to the extent
required to repay Dominion's outstanding debt to Motorola (approximately
$2,864,000) and to repay the 8%, $2,000,000 loan extended to Dominion by
PriCellular. An aggregate $400,000 was placed in escrow for a one year period
following the closing to ensure the accuracy of Dominion's representations and
warranties.
In connection with this purchase, the following assets were acquired and
liabilities assumed by PriCellular and contributed to their wholly owned
subsidiary:
<TABLE>
<S> <C>
Property and equipment......................................... $ 4,075,707
Intangible assets.............................................. 21,572,898
Contributed capital............................................ (25,346,898)
Other assets and liabilities excluding cash and cash
equivalents.................................................. (318,516)
------------
Increase in cash due to acquisition............................ $ (16,809)
============
</TABLE>
F-43
<PAGE> 114
ALABAMA 4 SYSTEM
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(8) DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL STATEMENTS
The carrying amounts of financial instruments approximate fair value
principally because of the short maturity of these items. Fair value estimates
are subject to inherent limitations. Estimates of fair value are made at a
specific point in time, based on relevant market information and information
about the financial instrument. The estimated fair values of financial
instruments presented above are not necessarily indicative of amounts the
Company might realize in actual market transactions. Estimates of fair value are
subjective in nature and involve uncertainties and matters of significant
judgment and therefore cannot be determined with precision. Changes in
assumptions could significantly affect the estimates.
F-44
<PAGE> 115
[US Unwired logo]
[Five Photographs of various facilities]
219 W. Prien Lake Road
Lake Charles, Louisiana
1101 Main Street, Great Bend, Kansas
321 AA Sunset Plaza
Grenada, Mississippi
Highway 31, Dive Shopping Center
Clanten, Alabama
118 Norfleet Drive
Senatobia, Mississippi
<PAGE> 116
================================================================================
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR ANY OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY
SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
---------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Certain Terms......................... 2
Additional Information................ 2
Prospectus Summary.................... 3
Risk Factors.......................... 9
Cautionary Statement Regarding Risks
and Uncertainties that may Affect
Future Results...................... 12
Use of Proceeds....................... 12
Dividend Policy....................... 13
Dilution.............................. 13
Capitalization........................ 14
Unaudited Pro Forma Condensed Combined
Financial Data...................... 15
Selected Consolidated Financial
Data................................ 21
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 22
Business.............................. 34
Management............................ 54
Principal Shareholders................ 58
Certain Transactions.................. 58
Description of Capital Stock.......... 61
Shares Eligible for Future Sale....... 65
Underwriting.......................... 66
Legal Matters......................... 67
Experts............................... 67
Index to Financial Statements......... F-1
</TABLE>
---------------------
THROUGH AND INCLUDING , 1997 (THE 25TH DAY AFTER THE DATE OF THIS
PROSPECTUS), ALL DEALERS EFFECTING TRANSACTIONS IN THE CLASS A COMMON STOCK,
WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A
PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A
PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
================================================================================
================================================================================
1,700,000 SHARES
[US UNWIRED INC. LOGO]
CLASS A COMMON STOCK
-----------------------
PROSPECTUS
-----------------------
THE ROBINSON-HUMPHREY
COMPANY, INC.
A.G. EDWARDS & SONS, INC.
, 1997
================================================================================
<PAGE> 117
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following is an itemized statement of expenses incurred in connection
with this Registration Statement. All such expenses will be paid by the Company.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee............. $ 14,375
NASD fee........................................................ 5,244
NASDAQ National Market listing fee.............................. 1,000
Legal fees and expenses......................................... *
Accounting fees and expenses.................................... *
Printing and engraving expenses................................. *
Blue Sky fees and expenses...................................... *
Miscellaneous expenses.......................................... *
--------
TOTAL................................................. *
========
</TABLE>
- ---------------
* To be filed by amendment.
All of the above items are estimates except the Securities and Exchange
Commission registration fee and the NASD filing fee.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 83 of the Louisiana Business Corporation Law (the "LBCL") gives
Louisiana corporations broad powers to indemnify their present and former
directors and officers and those of affiliated corporations against expenses
incurred in the defense of any lawsuit to which they are made parties by reason
of being or having been such directors or officers; subject to specific
conditions and exclusions gives a director or officer who successfully defends
an action the right to be so indemnified; and authorizes Louisiana corporations
to buy directors' and officers' liability insurance. Such indemnification is not
exclusive of any other rights to which those indemnified may be entitled under
any by-law, agreement, authorization of shareholders or otherwise.
The Company's By-laws make mandatory the indemnification of directors and
officers permitted by the LBCL. The standard to be applied in evaluating any
claim for indemnification (excluding claims for expenses incurred in connection
with the successful defense of any proceeding or matter therein for which
indemnification is mandatory without reference to any such standard) is whether
the claimant acted in good faith and in a manner he reasonably believed to be in
or not opposed to, the best interests of the Company. With respect to any
criminal action or proceeding, the standard is that the claimant had no
reasonable cause to believe the conduct was unlawful. No indemnification is
permitted in respect of any claim, issue or matter as to which a director or
officer shall have been adjudged by a court of competent jurisdiction to be
liable for willful or intentional misconduct or to have obtained an improper
personal benefit, unless, and only to the extent that the court shall determine
upon application that, in view of all the circumstances of the case, he is
fairly and reasonably entitled to indemnity for such expenses which the court
shall deem proper.
In addition, the Company's Articles of Incorporation provide that, pursuant
to Louisiana law, its directors shall not be liable for monetary damages for
breach of the directors' fiduciary duty of care to the Company and its
shareholders. This provision in the Articles of Incorporation does not eliminate
the duty of care, and in appropriate circumstances equitable remedies such as
injunctive or other forms of nonmonetary relief will remain available under
Louisiana law. In addition, each director will continue to be subject to
liability for breach of the director's duty of loyalty to the Company for acts
or omissions not in good faith or involving intentional misconduct, for knowing
violations of law, for actions leading to improper personal benefit to the
director, and for payment of dividends or approval of stock repurchases or
redemptions that are unlawful under
II-1
<PAGE> 118
Louisiana law. The Company also intends to enter into separate indemnification
agreements with each of its directors to effectuate these indemnity provisions
and to purchase directors' and officers' liability insurance.
The Underwriters have also agreed to indemnify the directors and certain of
the Company's officers against certain liabilities, including liabilities under
the Securities Act of 1933, as amended, or to contribute to payments that such
directors and officers may be required to make in respect thereof.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
On October 31, 1996, Cameron Communications Corporation ("Cameron") merged
into the Company (the "Merger"). In consideration of the Merger, shareholders of
Cameron received 2.192108 shares of Common Stock, par value $50 per share, of
the Company (the "Old Common Stock") in exchange for each share of common stock
of Cameron owned by them on the effective date of the Merger, for a total of
455.958460 shares of Old Common Stock. The issuance of Old Common Stock as
consideration for the Merger is exempt under Section 4(2) of the Securities Act
of 1933 (the "Act") and/or Regulation D thereunder as a transaction by an issuer
not involving any public offering. Fourteen Cameron shareholders received Old
Common Stock in the Merger. Seven of them were also shareholders of the Company
at the time of the Merger. Of those seven shareholders, four are officers and/or
directors of the Company. Of the remaining seven Cameron shareholders, four are
members of the same family who were represented by counsel in connection with
the Merger. All Cameron shareholders were provided with extensive information
about Cameron, the Company and the Merger before the Special Meeting of
Shareholders held on October 11, 1996 at which the Merger was approved.
Certificates representing the shares of Old Common Stock were appropriately
legended to prevent resales or retransfers in violation of registration
requirements. Subsequent to the Merger, each share of Old Common Stock of the
Company was reclassified into 16,643 shares of Class B Common Stock.
Certificates representing the Class B Common Stock contain the same restrictive
legends as those representing the Old Common Stock.
In each of 1994, 1995 and 1996, the Company awarded Old Common Stock as
bonuses to certain officers of the Company in recognition of services performed
on its behalf. Each of William L. Henning, Jr., John A. Henning and Thomas G.
Henning received four shares of Old Common Stock in 1994, two shares of Old
Common Stock in 1995 and one share of Old Common Stock in 1996. Robert Piper
received one share of Old Common Stock in 1995 and one share in 1996. A total of
23 shares of Old Common Stock were so awarded. The issuance of the Old Common
Stock as bonuses in each instance was exempt from registration under Section
4(2) of the Act as a transaction by an issuer not involving any public offering.
Each of the recipients was an officer and a director of the Company at the time
of each bonus award. Each share of Old Common Stock was subsequently
reclassified into 16,643 shares of Class B Common Stock. Certificates
representing the Class B Common Stock were appropriately legended to prevent
resales or retransfers in violation of registration requirements.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBERS DESCRIPTION OF EXHIBIT
- -------------------- ------------------------------------------------------------------------
<C> <S>
1.1 -- Form of Underwriting Agreement*
2.1 -- Agreement and Plan of Reorganization by and among Cameron
Communications Corporation, Mercury, Inc., Mercury Cellular Telephone
Company, Mercury Cellular of Kansas, Inc., Mississippi One Cellular
Telephone Company, CCC Holding Company, Cameron Telephone Company,
and Elizabeth Telephone Company dated September 19, 1996+
2.2 -- Joint Agreement of Merger of Cameron Communication Corporation with
and into Mercury, Inc.+
3.1 -- Articles of Incorporation of US Unwired Inc.*
</TABLE>
II-2
<PAGE> 119
<TABLE>
<CAPTION>
EXHIBIT
NUMBERS DESCRIPTION OF EXHIBIT
- -------------------- ------------------------------------------------------------------------
<C> <S>
3.2 -- By-Laws of US Unwired Inc.*
4.1 -- Amended and Restated Loan Agreement By and Between CoBank, ACB and
CTC Financial, Inc., dated September 27, 1994, in the principal sum
of $17,400,000+
4.2 -- Amended and Restated Continuing Guaranty By and Between Miss One
Cellular Telephone Co. and CoBank, ACB, dated September 27, 1994, in
the principal sum of $17,400,000+
4.3 -- Amended and Restated Promissory Note By CTC Financial, Inc. in favor
of CoBank dated May 15, 1996 in the principal sum of $17,400,000+
4.4 -- First Amendment and Supplement to Security Agreement By and Between
Miss One and CoBank, ACB dated May 15, 1996+
4.5 -- First Amendment and Supplement to Deed of Trust, Security Agreement,
and Fixture Filing By and Between Miss One to Karen Hawkins, Trustee
in the principal sum of CoBank, ACB dated May 15, 1996+
4.6 -- Mortgage By Miss One to and for the benefit of CoBank, ACB dated May
15, 1996 in the principal sum of $17,400,000+
4.7 -- Continuing Guaranty made by Mercury, Inc. for the benefit of CoBank,
ACB, dated May 15, 1996, in the principal sum of $17,400,000+
4.8 -- First Amendment and Supplement to Pledge Agreement By and Between
Mercury, Inc. and CoBank, ACB, dated May 15, 1996, in the principal
sum of $17,400,000+
4.9 -- Limited Recourse Continuing Guaranty By William Henning, Sr., in
favor of CoBank, ACB, dated May 15, 1996, in the principal sum of
$17,400,000+
4.10 -- Amended and Restated Act of Subordination By Cameron Telephone and
Miss One in favor of CoBank, ACB, dated September 27, 1996+
4.11 -- Amended and Restated Promissory Note By Miss One in favor of CTC
Financial, dated May 15, 1996, in the principal sum of $17,400,000+
4.12 -- Security Agreement By and Between Mercury, Inc. and CoBank, ACB,
dated July 1, 1996+
4.13 -- First Amendment and Supplement to Amended and Restated Loan Agreement
By and Between CoBank, ACB and CTC Financial, Inc., dated July 1,
1996+
4.14 -- Second Amended and Restated Promissory Note By Miss One in favor of
CTC Financial, Inc., dated July 1, 1996, in the principal sum of
$32,400,000+
4.15 -- Second Amended and Restated Promissory Note By CTC Financial, Inc. in
favor of CoBank, ACB, dated July 1, 1996, in the principal sum of
$32,400,000+
4.16 -- First Amendment and Supplement to Amended and Restated Continuing
Guaranty By and Between Miss One and CoBank, ACB, dated July 1, 1996+
4.17 -- Second Amendment and Supplement to Security Agreement By and Between
Miss One and CoBank, ACB, dated July 1, 1996+
4.18 -- Second Amendment and Supplement to Deed of Trust By and Between Miss
One and Karen Hawkins, Trustee for CoBank, ACB, dated July 1, 1996+
4.19 -- First Amendment and Supplement to Mortgage By and Between Miss One
and CoBank, ACB, dated July 1, 1996+
4.20 -- First Amendment and Supplement to Continuing Guaranty Made by
Mercury, Inc. in favor of CoBank, ACB, dated July 1, 1996+
4.21 -- Second Amendment and Supplement to Pledge Agreement By and Between
Mercury, Inc. and CoBank, ACB, dated July 1, 1996+
</TABLE>
II-3
<PAGE> 120
<TABLE>
<CAPTION>
EXHIBIT
NUMBERS DESCRIPTION OF EXHIBIT
- -------------------- ------------------------------------------------------------------------
<C> <S>
4.22 -- First Amendment to Limited Recourse Continuing Guaranty By and
Between William Henning, Sr. and CoBank, ACB, dated July 1, 1996+
4.23 -- First Amendment and Supplement to Amended and Restated Act of
Subordination by and Among Cameron Telephone, Miss One and CoBank,
ACB, dated July 1, 1996+
4.24 -- Promissory Note dated May 15, 1996 by CTC Financial, Inc. in favor of
CoBank, ACB, in the principal sum of $5,000,000+
4.25 -- Promissory Note dated May 15, 1996 by Mercury, Inc. in favor of CTC
Financial, Inc. in the principal sum of $5,000,000+
4.26 -- Loan Agreement By and Between CoBank, ACB, and CTC Financial, Inc.
dated July 1, 1996 in the principal sum of $13,000,000+
4.27 -- Promissory Note By CTC Financial, Inc. in favor of CoBank, ACB, dated
July 1, 1996 in the principal sum of $13,000,000+
4.28 -- First Amendment and Supplement to Continuing Guaranty By and Between
Mercury Cellular Telephone Co. and CoBank, ACB, dated July 1, 1996+
4.29 -- First Amendment and Supplement to Security Agreement By and Between
Mercury Cellular Telephone Co. and CoBank, ACB, dated July 1, 1996+
4.30 -- First Amendment and Supplement to Mortgage and Security Agreement
Mercury Cellular Telephone Co. and CoBank, ACB, dated July 1, 1996+
4.31 -- First Amendment and Supplement to Limited Recourse Continuing
Guaranty By and Between Cameron Communications Corporation and
CoBank, ACB, dated July 1, 1996+
4.32 -- First Amendment and Supplement to Pledge Agreement By and Between
Cameron Communications Corporation and CoBank, ACB, dated July 1,
1996+
4.33 -- First Amendment and Supplement to Limited Recourse Continuing
Guaranty By and Between Mercury and CoBank, ACB, dated July 1, 1996+
4.34 -- First Amendment and Supplement to Pledge Agreement By and Between
Mercury, Inc. and CoBank, ACB, dated July 1, 1996+
4.35 -- Act of Subordination By Mercury Cellular Telephone Company and Miss
One, in favor of CoBank, ACB, dated July 1, 1996+
4.36 -- Promissory Note Mississippi-34 Cellular Corp. to Cameron
Communications Corp., dated November 20, 1992, in the principal sum
of $20,000+
4.37 -- Subordination Agreement By and Among Robert G. Mounger, William M.
Mounger, II, William Yandell, III and Wirt A. Yerger, III,
Mississippi-34 Cellular Corporation and Mercury, Inc., dated November
20, 1992+
4.38 -- Promissory Note By Miss-3 Cellular Corporation in favor of Robert
Mounger, dated March 27, 1992, in the principal sum of $16,500+
4.39 -- Promissory Note By Miss-3 Cellular Corporation in favor of Robert
Mounger, dated April 15, 1992, in the principal sum of $7,500+
4.40 -- Promissory Note By Miss-3 Cellular Corporation in favor of Robert
Mounger, II, dated April 1, 1992, in the principal sum of $17,500.00+
4.41 -- Promissory Note By Miss-3 Cellular Corporation in favor of William M.
Yandell, III dated April 30, 1992, in the principal sum of
$17,500.00+
4.42 -- Promissory Note By Miss-3 Cellular Corporation in favor of Wirt A.
Yerger, III, dated May 12, 1992, in the principal sum of $2,500.00+
</TABLE>
II-4
<PAGE> 121
<TABLE>
<CAPTION>
EXHIBIT
NUMBERS DESCRIPTION OF EXHIBIT
- -------------------- ------------------------------------------------------------------------
<C> <S>
4.43 -- Promissory Note By Miss-3 Cellular Corporation, in favor of Wirt A.
Yerger, III dated March 25, 1992, in the principal sum of $25,000+
4.44 -- Pledge Agreement By and Among the owners of capital stock of Miss-34
Cellular Corporation and AT&T Credit Corporation, dated December 20,
1993*
4.45 -- Capital Note By Miss-34 Cellular Corporation to AT&T Credit
Corporation, dated December 30, 1993, in the principal sum of
$1,684,987*
4.46 -- Deed of Trust, Security Agreement, Financing Statement and Assignment
of Rents and Leases Entered into by Miss-34 Cellular Corporation in
favor of AT&T Credit Corporation, dated December 20, 1993, in the
principal sum of $9,980,000*
4.47 -- Equipment Note Miss-34 By Cellular Corporation in favor of AT&T
Credit Corporation, dated December 30, 1993, in the principal sum of
$2,138,836*
4.48 -- This item intentionally left blank.
4.49 -- Mortgage and Security Agreement By Mercury Cellular Telephone Co. in
favor of CoBank, ACB, dated April 20, 1995+
4.50 -- Security Agreement By and Between Mercury Cellular Telephone Company
and CoBank dated, April 20, 1995+
4.51 -- Loan Agreement By and Between CoBank, ACB and CTC Financial, Inc.,
dated April 20, 1995 dated April 20, 1995+
4.52 -- Continuing Guaranty By Mercury Cellular Telephone Company for the
benefit of CoBank, ACB dated April 20, 1995+
4.53 -- Limited Recourse Continuing By Mercury, Inc. for the benefit of
CoBank, ACB, dated April 20, 1995+
4.54 -- Limited Recourse Continuing Guaranty By Cameron Communications
Corporation for the benefit of CoBank, ACB, dated April 20, 1995+
4.55 -- Promissory Note by CTC Financial, Inc. to CoBank, ACB, dated April
20, 1995, in the principal sum of $18,000,000+
4.56 -- Promissory Note By Mercury Cellular Telephone Co. in favor of CTC
Financial, Inc. dated April 20, 1995, in the principal sum of
$18,000,000+
4.57 -- Pledge Agreement By and Between Cameron Communications Corporation
and CoBank, ACB, dated April 20, 1995+
4.58 -- Pledge Agreement By and Between Mercury, Inc. and CoBank, ACB, dated
April 20, 1995+
4.59 -- Security Agreement By and Between Mercury Cellular Telephone Company
and CoBank, ACB, dated April 20, 1995+
4.60 -- Security Agreement By and Between Mercury Cellular of Kansas, Inc.
and CoBank, ACB, dated April 5, 1995+
4.61 -- Loan Agreement By and Between CoBank, ACB and Mercury Cellular of
Kansas, Inc., dated April 20, 1995, in the principal sum of
$17,100,000+
4.62 -- Limited Recourse Continuing Guaranty By Mercury Cellular Telephone
Company in favor of CoBank, ACB, dated April 20, 1995+
4.63 -- Collateral Assignment of Tenant's Interest in Leases By and Between
Mercury Cellular of Kansas, Inc. and CoBank, ACB, dated April 20,
1995, in the principal sum of $17,100,000+
</TABLE>
II-5
<PAGE> 122
<TABLE>
<CAPTION>
EXHIBIT
NUMBERS DESCRIPTION OF EXHIBIT
- -------------------- ------------------------------------------------------------------------
<C> <S>
4.64 -- Security Agreement By and Between Mercury Cellular of Kansas, Inc.
and CoBank, ACB, dated April 20, 1995+
4.65 -- Pledge Agreement By and Between Mercury Cellular Telephone Company
and CoBank, ACB, dated April 20, 1995+
4.66 -- Promissory Note By Mercury Cellular of Kansas, Inc. in favor of
CoBank, ACB, dated April 20, 1995, in the principal sum of
$17,100,000+
4.67 -- Loan and Security Agreement dated as of December 20, 1993 between
Mississippi-34 Cellular Corporation and AT&T Credit Corporation*
4.68 -- Promissory Note dated April 14, 1993 in the principal sum of
$2,779,924 by Mercury, Inc. in favor of Cameron Telephone Company.+
4.69 -- First Amendment and Supplement to Loan Agreement between CoBank, ACB,
and Mercury Cellular of Kansas, Inc. dated as of December 15, 1996+
4.70 -- Agreement Regarding Amendments to Loan Documents between CTC
Financial, Inc., Mercury, Inc., Mississippi One Cellular Telephone
Company, William L. Henning, Sr. and CoBank, ACB, dated as of
November 15, 1996+
4.71 -- Assignment, Assumption and Agreement Regarding Amendments to Loan
Documents between CoBank, ACB, Mercury Cellular of Kansas, Inc,
Mercury, Inc., et al., dated as of December 15, 1996+
4.72 -- Promissory Note by Mercury Cellular Telephone Company in favor of CTC
Financial, Inc. dated November 25, 1996 in the principal sum of
$4,000,000+
4.73 -- Second Amendment and Supplement to Continuing Guaranty between
Mercury Cellular Telephone Company, Inc. and CoBank, ACB, dated as of
November 25, 1996+
4.74 -- Loan Agreement between CTC Financial, Inc. and CoBank, ACB, dated as
of November 25, 1996+
4.75 -- First Amendment and Supplement to Act of Subordination between
Mercury Cellular Telephone Company, Mississippi One Cellular
Telephone Company and CoBank, ACB, dated as of November 25, 1996+
4.76 -- Promissory Note by CTC Financial, Inc. in favor of CoBank, ACB, dated
November 25, 1996 in the principal sum of $4,000,000+
4.77 -- Assumption Agreement between CoBank, ACB, and Mercury, Inc. dated
October 31, 1996+
4.78 -- Specimen Class A Common Stock certificate*
4.79 -- Agreement dated as of December 26, 1996 among U.S. Unwired Inc.,
William L. Henning, Sr., William L. Henning, Jr., John A. Henning,
Thomas G. Henning, Lena B. Henning, Robert Piper, Hansen Evans
Scobee, Henry Rice Scobee, Renee Scobee, Marie Scobee Williams,
Robert Piper, Thomas G. Henning, as trustee of the William L.
Henning, Jr. Exempt Class Trust No. 1, U/A 9-20-96, Thomas G. Henning
as Trustee of the John A. Henning Exempt Class Trust No. 1, U/A
9-20-96 and Thomas G. Henning as trustee of the Thomas G. Henning
Exempt Class Trust No. 1, U/A 9-20-96*
5.1 -- Form of Opinion of Correro Fishman Haygood Phelps Weiss Walmsley &
Casteix, L.L.P. re: legality of Class A Common Stock*
10.1 -- BTA Management and Construction Services Agreement By and Between
Mercury, Inc. and Meretel Communications, Limited Partnership dated
July 1, 1996+
</TABLE>
II-6
<PAGE> 123
<TABLE>
<CAPTION>
EXHIBIT
NUMBERS DESCRIPTION OF EXHIBIT
- -------------------- ------------------------------------------------------------------------
<C> <S>
10.2 -- Articles of Partnership in Commendam of Meretel Communications
Limited Partnership By and Among Wireless Management Corporation and
Eatel Corp, Inc., Mercury Cellular Telephone Company, Fort Bend
Telephone Company and Meretel Wireless, Inc. dated July 25, 1995+
10.3 -- Nationwide Messaging Reseller Agreement By and Between MobileComm
Nationwide Operations, Inc. and Mercury Cellular Telephone Co. dated
December 19, 1994+
10.4 -- Arch Nationwide Paging Reseller Agreement By and Between Arch
Nationwide Paging and Mercury Cellular Telephone Company, dated April
7, 1995+
10.5 -- RSA Management and Construction Services Agreement By and Between
Mercury Inc. and Miss-34 Cellular Corporation dated June 1, 1994+
10.6 -- RSA Management and Construction Services Agreement By and Between
Mercury, Inc. and Miss.-1 Telephone Co. dated May 1, 1996+
10.7 -- RSA Management and Construction Services Agreement By and Between
Mercury, Inc. and Mercury Cellular Telephone Co. dated May 1, 1996+
10.8 -- RSA Management and Construction Services Agreement By and Between
Mercury, Inc. and Mercury Cellular of Kansas, Inc., dated May 1,
1996+
10.9 -- Intentionally omitted
10.10 -- Asset Purchase Agreement By and Between West Alabama Cellular
telephone Company, Inc. and Mississippi One Cellular Telephone Co.,
dated March 4, 1996+
10.11 -- CellularOne License Agreement Between CellularOne Group and Mercury,
Inc., dated April 13, 1993+
10.12 -- Management and Accounting Services By and Between Mercury Information
Technologies, Inc. and Mercury, Inc. Agreement dated November 7,
1995+
10.13 -- MIS Services Agreement By and Between Mercury, Inc. and Maas.net,
LLC, dated June 6, 1996+
10.14 -- Lease Agreement By and Between William L. Henning and Lena B. Henning
and Mercury Cellular Telephone Company, Inc., dated January 1, 1990+
10.15 -- Lease By and Between Mercury, Inc. ("Lessor") and Mercury Cellular
Telephone Company ("Lessee"), dated March 1, 1992+
10.16 -- Commitment Letter, dated September 13, 1996, from CoBank, ACB+
10.17 -- Purchase Agreement By and Between Miscellco Communications, Inc. and
Mercury Cellular of Kansas, Inc. dated April 19, 1995+
10.18 -- Letter Agreement dated October 18, 1995 between Cameron
Communications Corporation and Mercury Information Technologies,
Inc.+
10.19 -- Act of Sale dated August 31, 1994 between Mercury, Inc. and
Mississippi One Cellular Telephone Company.+
10.20 -- US Unwired Inc. 1997 Stock Option Plan*
10.21 -- Commitment Letter dated October 24, 1996 from Rural Telephone
Financial Cooperative to Wireless Management Corporation+
10.22 -- Form of Stock Purchase Agreement between Mercury, Inc., David Bailey,
E. B. Martin, Jr., William M. Mounger, II, Robert M. Mounger, James
A. Murrell, III, William M. Yandall, III and Wirt A. Yeager, III+
11 -- Statement regarding computation of per share earnings+
21 -- List of Subsidiaries+
</TABLE>
II-7
<PAGE> 124
<TABLE>
<CAPTION>
EXHIBIT
NUMBERS DESCRIPTION OF EXHIBIT
- -------------------- ------------------------------------------------------------------------
<C> <S>
23.1 -- Consent of KPMG Peat Marwick LLP*
23.2 -- Consent of KPMG Peat Marwick LLP*
23.3 -- Consent of KPMG Peat Marwick LLP*
23.4 -- Consent of KPMG Peat Marwick LLP*
23.5 -- Consent of Smith, Turner & Reeves*
23.6 -- Consent of Elliot Goldberg CPA*
23.7 -- Consent of Correro Fishman Haygood Phelps Weiss Walmsley & Casteix,
L.L.P. (included in opinion filed as Exhibit 5.1)*
24.1 -- Powers of Attorney (included on the Signature Page)+
27.1 -- Financial Data Schedule+
</TABLE>
- ---------------
* Filed herewith.
+ Previously filed.
(b) Financial Statement Schedules
Schedule II -- Valuation and Qualifying Accounts
All other schedules are omitted because they are inapplicable or the
requested information is shown in the consolidated financial statements or
notes thereto.
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes to provide to the Underwriters
at the closing specified in the Underwriting Agreement, certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery of each purchaser.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this Registration Statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act of 1933 shall be deemed to be part
of this Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at the
time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons pursuant
to the provisions described in Item 14, above, or otherwise, the Registrant has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act of 1933 and will be governed by the
final adjudication of such issue.
II-8
<PAGE> 125
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Lake Charles, State of
Louisiana, on January 17, 1996.
MERCURY, INC.
By: /s/ WILLIAM L. HENNING, JR.
------------------------------------
William L. Henning, Jr.
Chairman and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ---------------------------- ------------------
<C> <S> <C>
/s/ WILLIAM L. HENNING, JR. Chairman, Chief Executive January 17, 1996
- --------------------------------------------- Officer and Director
William L. Henning, Jr.
/s/ ROBERT PIPER President, Chief Operating January 17, 1996
- --------------------------------------------- Officer and Director
Robert Piper
/s/ DUSTY J. DUMAS Chief Financial Officer January 17, 1996
- ---------------------------------------------
Dusty J. Dumas
/s/ THOMAS G. HENNING Secretary, General Counsel January 17, 1996
- --------------------------------------------- and Director
Thomas G. Henning
/s/ WILLIAM L. HENNING, SR. Director January 17, 1996
- ---------------------------------------------
William L. Henning, Sr.
/s/ JOHN A. HENNING Director January 17, 1996
- ---------------------------------------------
John A. Henning
</TABLE>
II-9
<PAGE> 126
SCHEDULE II
US UNWIRED INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- ------------------------------------------------- -------- ---------- -------- ----------
BALANCE AT CHARGED TO BALANCE
BEGINNING COSTS AND AT END
DESCRIPTION OF PERIOD EXPENSES OTHER OF PERIOD
- ------------------------------------------------- -------- ---------- -------- ----------
<S> <C> <C> <C> <C>
1993
Deducted in balance sheet from subscriber
receivables:
Allowance for doubtful accounts............. $ 22,686 $154,344 $ 68,165 $ 245,195
-------- -------- -------- ----------
1994
Deducted in balance sheet from subscriber
receivables:
Allowance for doubtful accounts............. $245,195 $106,349 $(11,646) $ 339,898
-------- -------- -------- ----------
1995
Deducted in balance sheet from subscriber
receivables:
Allowance for doubtful accounts............. $339,898 $589,338 $ 76,764 $1,006,000
-------- -------- -------- ----------
</TABLE>
<PAGE> 127
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
- --------------------
<C> <S>
1.1 -- Form of Underwriting Agreement*
2.1 -- Agreement and Plan of Reorganization by and among Cameron
Communications Corporation, Mercury, Inc., Mercury Cellular Telephone
Company, Mercury Cellular of Kansas, Inc., Mississippi One Cellular
Telephone Company, CCC Holding Company, Cameron Telephone Company,
and Elizabeth Telephone Company dated September 19, 1996+
2.2 -- Joint Agreement of Merger of Cameron Communication Corporation with
and into Mercury, Inc.+
3.1 -- Articles of Incorporation of US Unwired Inc.*
3.2 -- By-Laws of US Unwired Inc.*
4.1 -- Amended and Restated Loan Agreement By and Between CoBank, ACB and
CTC Financial, Inc., dated September 27, 1994, in the principal sum
of $17,400,000+
4.2 -- Amended and Restated Continuing Guaranty By and Between Miss One
Cellular Telephone Co. and CoBank, ACB, dated September 27, 1994, in
the principal sum of $17,400,000+
4.3 -- Amended and Restated Promissory Note By CTC Financial, Inc. in favor
of CoBank dated May 15, 1996 in the principal sum of $17,400,000+
4.4 -- First Amendment and Supplement to Security Agreement By and Between
Miss One and CoBank, ACB dated May 15, 1996+
4.5 -- First Amendment and Supplement to Deed of Trust, Security Agreement,
and Fixture Filing By and Between Miss One to Karen Hawkins, Trustee
in the principal sum of CoBank, ACB dated May 15, 1996+
4.6 -- Mortgage By Miss One to and for the benefit of CoBank, ACB dated May
15, 1996 in the principal sum of $17,400,000+
4.7 -- Continuing Guaranty made by Mercury, Inc. for the benefit of CoBank,
ACB, dated May 15, 1996, in the principal sum of $17,400,000+
4.8 -- First Amendment and Supplement to Pledge Agreement By and Between
Mercury, Inc. and CoBank, ACB, dated May 15, 1996, in the principal
sum of $17,400,000+
4.9 -- Limited Recourse Continuing Guaranty By William Henning, Sr., in
favor of CoBank, ACB, dated May 15, 1996, in the principal sum of
$17,400,000+
4.10 -- Amended and Restated Act of Subordination By Cameron Telephone and
Miss One in favor of CoBank, ACB, dated September 27, 1996+
4.11 -- Amended and Restated Promissory Note By Miss One in favor of CTC
Financial, dated May 15, 1996, in the principal sum of $17,400,000+
4.12 -- Security Agreement By and Between Mercury, Inc. and CoBank, ACB,
dated July 1, 1996+
4.13 -- First Amendment and Supplement to Amended and Restated Loan Agreement
By and Between CoBank, ACB and CTC Financial, Inc., dated July 1,
1996+
4.14 -- Second Amended and Restated Promissory Note By Miss One in favor of
CTC Financial, Inc., dated July 1, 1996, in the principal sum of
$32,400,000+
4.15 -- Second Amended and Restated Promissory Note By CTC Financial, Inc. in
favor of CoBank, ACB, dated July 1, 1996, in the principal sum of
$32,400,000+
</TABLE>
<PAGE> 128
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
- --------------------
<C> <S>
4.16 -- First Amendment and Supplement to Amended and Restated Continuing
Guaranty By and Between Miss One and CoBank, ACB, dated July 1, 1996+
4.17 -- Second Amendment and Supplement to Security Agreement By and Between
Miss One and CoBank, ACB, dated July 1, 1996+
4.18 -- Second Amendment and Supplement to Deed of Trust By and Between Miss
One and Karen Hawkins, Trustee for CoBank, ACB, dated July 1, 1996+
4.19 -- First Amendment and Supplement to Mortgage By and Between Miss One
and CoBank, ACB, dated July 1, 1996+
4.20 -- First Amendment and Supplement to Continuing Guaranty Made by
Mercury, Inc. in favor of CoBank, ACB, dated July 1, 1996+
4.21 -- Second Amendment and Supplement to Pledge Agreement By and Between
Mercury, Inc. and CoBank, ACB, dated July 1, 1996+
4.22 -- First Amendment to Limited Recourse Continuing Guaranty By and
Between William Henning, Sr. and CoBank, ACB, dated July 1, 1996+
4.23 -- First Amendment and Supplement to Amended and Restated Act of
Subordination by and Among Cameron Telephone, Miss One and CoBank,
ACB, dated July 1, 1996+
4.24 -- Promissory Note dated May 15, 1996 by CTC Financial, Inc. in favor of
CoBank, ACB, in the principal sum of $5,000,000+
4.25 -- Promissory Note dated May 15, 1996 by Mercury, Inc. in favor of CTC
Financial, Inc. in the principal sum of $5,000,000+
4.26 -- Loan Agreement By and Between CoBank, ACB, and CTC Financial, Inc.
dated July 1, 1996 in the principal sum of $13,000,000+
4.27 -- Promissory Note By CTC Financial, Inc. in favor of CoBank, ACB, dated
July 1, 1996 in the principal sum of $13,000,000+
4.28 -- First Amendment and Supplement to Continuing Guaranty By and Between
Mercury Cellular Telephone Co. and CoBank, ACB, dated July 1, 1996+
4.29 -- First Amendment and Supplement to Security Agreement By and Between
Mercury Cellular Telephone Co. and CoBank, ACB, dated July 1, 1996+
4.30 -- First Amendment and Supplement to Mortgage and Security Agreement
Mercury Cellular Telephone Co. and CoBank, ACB, dated July 1, 1996+
4.31 -- First Amendment and Supplement to Limited Recourse Continuing
Guaranty By and Between Cameron Communications Corporation and
CoBank, ACB, dated July 1, 1996+
4.32 -- First Amendment and Supplement to Pledge Agreement By and Between
Cameron Communications Corporation and CoBank, ACB, dated July 1,
1996+
4.33 -- First Amendment and Supplement to Limited Recourse Continuing
Guaranty By and Between Mercury and CoBank, ACB, dated July 1, 1996+
4.34 -- First Amendment and Supplement to Pledge Agreement By and Between
Mercury, Inc. and CoBank, ACB, dated July 1, 1996+
4.35 -- Act of Subordination By Mercury Cellular Telephone Company and Miss
One, in favor of CoBank, ACB, dated July 1, 1996+
4.36 -- Promissory Note Mississippi-34 Cellular Corp. to Cameron
Communications Corp., dated November 20, 1992, in the principal sum
of $20,000+
</TABLE>
<PAGE> 129
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
- --------------------
<C> <S>
4.37 -- Subordination Agreement By and Among Robert G. Mounger, William M.
Mounger, II, William Yandell, III and Wirt A. Yerger, III,
Mississippi-34 Cellular Corporation and Mercury, Inc., dated November
20, 1992+
4.38 -- Promissory Note By Miss-3 Cellular Corporation in favor of Robert
Mounger, dated March 27, 1992, in the principal sum of $16,500+
4.39 -- Promissory Note By Miss-3 Cellular Corporation in favor of Robert
Mounger, dated April 15, 1992, in the principal sum of $7,500+
4.40 -- Promissory Note By Miss-3 Cellular Corporation in favor of Robert
Mounger, II, dated April 1, 1992, in the principal sum of $17,500.00+
4.41 -- Promissory Note By Miss-3 Cellular Corporation in favor of William M.
Yandell, III dated April 30, 1992, in the principal sum of
$17,500.00+
4.42 -- Promissory Note By Miss-3 Cellular Corporation in favor of Wirt A.
Yerger, III, dated May 12, 1992, in the principal sum of $2,500.00+
4.43 -- Promissory Note By Miss-3 Cellular Corporation, in favor of Wirt A.
Yerger, III dated March 25, 1992, in the principal sum of $25,000+
4.44 -- Pledge Agreement By and Among the owners of capital stock of Miss-34
Cellular Corporation and AT&T Credit Corporation, dated December 20,
1993*
4.45 -- Capital Note By Miss-34 Cellular Corporation to AT&T Credit
Corporation, dated December 30, 1993, in the principal sum of
$1,684,987*
4.46 -- Deed of Trust, Security Agreement, Financing Statement and Assignment
of Rents and Leases Entered into by Miss-34 Cellular Corporation in
favor of AT&T Credit Corporation, dated December 20, 1993, in the
principal sum of $9,980,000*
4.47 -- Equipment Note Miss-34 By Cellular Corporation in favor of AT&T
Credit Corporation, dated December 30, 1993, in the principal sum of
$2,138,836*
4.48 -- This item intentionally left blank.
4.49 -- Mortgage and Security Agreement By Mercury Cellular Telephone Co. in
favor of CoBank, ACB, dated April 20, 1995+
4.50 -- Security Agreement By and Between Mercury Cellular Telephone Company
and CoBank dated, April 20, 1995+
4.51 -- Loan Agreement By and Between CoBank, ACB and CTC Financial, Inc.,
dated April 20, 1995 dated April 20, 1995+
4.52 -- Continuing Guaranty By Mercury Cellular Telephone Company for the
benefit of CoBank, ACB dated April 20, 1995+
4.53 -- Limited Recourse Continuing By Mercury, Inc. for the benefit of
CoBank, ACB, dated April 20, 1995+
4.54 -- Limited Recourse Continuing Guaranty By Cameron Communications
Corporation for the benefit of CoBank, ACB, dated April 20, 1995+
4.55 -- Promissory Note by CTC Financial, Inc. to CoBank, ACB, dated April
20, 1995, in the principal sum of $18,000,000+
4.56 -- Promissory Note By Mercury Cellular Telephone Co. in favor of CTC
Financial, Inc. dated April 20, 1995, in the principal sum of
$18,000,000+
4.57 -- Pledge Agreement By and Between Cameron Communications Corporation
and CoBank, ACB, dated April 20, 1995+
</TABLE>
<PAGE> 130
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
- --------------------
<C> <S>
4.58 -- Pledge Agreement By and Between Mercury, Inc. and CoBank, ACB, dated
April 20, 1995+
4.59 -- Security Agreement By and Between Mercury Cellular Telephone Company
and CoBank, ACB, dated April 20, 1995+
4.60 -- Security Agreement By and Between Mercury Cellular of Kansas, Inc.
and CoBank, ACB, dated April 5, 1995+
4.61 -- Loan Agreement By and Between CoBank, ACB and Mercury Cellular of
Kansas, Inc., dated April 20, 1995, in the principal sum of
$17,100,000+
4.62 -- Limited Recourse Continuing Guaranty By Mercury Cellular Telephone
Company in favor of CoBank, ACB, dated April 20, 1995+
4.63 -- Collateral Assignment of Tenant's Interest in Leases By and Between
Mercury Cellular of Kansas, Inc. and CoBank, ACB, dated April 20,
1995, in the principal sum of $17,100,000+
4.64 -- Security Agreement By and Between Mercury Cellular of Kansas, Inc.
and CoBank, ACB, dated April 20, 1995+
4.65 -- Pledge Agreement By and Between Mercury Cellular Telephone Company
and CoBank, ACB, dated April 20, 1995+
4.66 -- Promissory Note By Mercury Cellular of Kansas, Inc. in favor of
CoBank, ACB, dated April 20, 1995, in the principal sum of
$17,100,000+
4.67 -- Loan and Security Agreement dated as of December 20, 1993 between
Mississippi-34 Cellular Corporation and AT&T Credit Corporation*
4.68 -- Promissory Note dated April 14, 1993 in the principal sum of
$2,779,924 by Mercury, Inc. in favor of Cameron Telephone Company.+
4.69 -- First Amendment and Supplement to Loan Agreement between CoBank, ACB,
and Mercury Cellular of Kansas, Inc. dated as of December 15, 1996+
4.70 -- Agreement Regarding Amendments to Loan Documents between CTC
Financial, Inc., Mercury, Inc., Mississippi One Cellular Telephone
Company, William L. Henning, Sr. and CoBank, ACB, dated as of
November 15, 1996+
4.71 -- Assignment, Assumption and Agreement Regarding Amendments to Loan
Documents between CoBank, ACB, Mercury Cellular of Kansas, Inc,
Mercury, Inc., et al., dated as of December 15, 1996+
4.72 -- Promissory Note by Mercury Cellular Telephone Company in favor of CTC
Financial, Inc. dated November 25, 1996 in the principal sum of
$4,000,000+
4.73 -- Second Amendment and Supplement to Continuing Guaranty between
Mercury Cellular Telephone Company, Inc. and CoBank, ACB, dated as of
November 25, 1996+
4.74 -- Loan Agreement between CTC Financial, Inc. and CoBank, ACB, dated as
of November 25, 1996+
4.75 -- First Amendment and Supplement to Act of Subordination between
Mercury Cellular Telephone Company, Mississippi One Cellular
Telephone Company and CoBank, ACB, dated as of November 25, 1996+
4.76 -- Promissory Note by CTC Financial, Inc. in favor of CoBank, ACB, dated
November 25, 1996 in the principal sum of $4,000,000+
4.77 -- Assumption Agreement between CoBank, ACB, and Mercury, Inc. dated
October 31, 1996+
4.78 -- Specimen Class A Common Stock certificate*
</TABLE>
<PAGE> 131
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
- --------------------
<C> <S>
4.79 -- Agreement dated as of December 26, 1996 among U.S. Unwired Inc.,
William L. Henning, Sr., William L. Henning, Jr., John A. Henning,
Thomas G. Henning, Lena B. Henning, Robert Piper, Hansen Evans
Scobee, Henry Rice Scobee, Renee Scobee, Marie Scobee Williams,
Robert Piper, Thomas G. Henning, as trustee of the William L.
Henning, Jr. Exempt Class Trust No. 1, U/A 9-20-96, Thomas G. Henning
as Trustee of the John A. Henning Exempt Class Trust No. 1, U/A
9-20-96 and Thomas G. Henning as trustee of the Thomas G. Henning
Exempt Class Trust No. 1, U/A 9-20-96*
5.1 -- Form of Opinion of Correro Fishman Haygood Phelps Weiss Walmsley &
Casteix, L.L.P. re: legality of Class A Common Stock*
10.1 -- BTA Management and Construction Services Agreement By and Between
Mercury, Inc. and Meretel Communications, Limited Partnership dated
July 1, 1996+
10.2 -- Articles of Partnership in Commendam of Meretel Communications
Limited Partnership By and Among Wireless Management Corporation and
Eatel Corp, Inc., Mercury Cellular Telephone Company, Fort Bend
Telephone Company and Meretel Wireless, Inc. dated July 25, 1995+
10.3 -- Nationwide Messaging Reseller Agreement By and Between MobileComm
Nationwide Operations, Inc. and Mercury Cellular Telephone Co. dated
December 19, 1994+
10.4 -- Arch Nationwide Paging Reseller Agreement By and Between Arch
Nationwide Paging and Mercury Cellular Telephone Company, dated April
7, 1995+
10.5 -- RSA Management and Construction Services Agreement By and Between
Mercury Inc. and Miss-34 Cellular Corporation dated June 1, 1994+
10.6 -- RSA Management and Construction Services Agreement By and Between
Mercury, Inc. and Miss.-1 Telephone Co. dated May 1, 1996+
10.7 -- RSA Management and Construction Services Agreement By and Between
Mercury, Inc. and Mercury Cellular Telephone Co. dated May 1, 1996+
10.8 -- RSA Management and Construction Services Agreement By and Between
Mercury, Inc. and Mercury Cellular of Kansas, Inc., dated May 1,
1996+
10.9 -- Intentionally omitted
10.10 -- Asset Purchase Agreement By and Between West Alabama Cellular
telephone Company, Inc. and Mississippi One Cellular Telephone Co.,
dated March 4, 1996+
10.11 -- CellularOne License Agreement Between CellularOne Group and Mercury,
Inc., dated April 13, 1993+
10.12 -- Management and Accounting Services By and Between Mercury Information
Technologies, Inc. and Mercury, Inc. Agreement dated November 7,
1995+
10.13 -- MIS Services Agreement By and Between Mercury, Inc. and Maas.net,
LLC, dated June 6, 1996+
10.14 -- Lease Agreement By and Between William L. Henning and Lena B. Henning
and Mercury Cellular Telephone Company, Inc., dated January 1, 1990+
10.15 -- Lease By and Between Mercury, Inc. ("Lessor") and Mercury Cellular
Telephone Company ("Lessee"), dated March 1, 1992+
10.16 -- Commitment Letter, dated September 13, 1996, from CoBank, ACB+
10.17 -- Purchase Agreement By and Between Miscellco Communications, Inc. and
Mercury Cellular of Kansas, Inc. dated April 19, 1995+
</TABLE>
<PAGE> 132
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
- --------------------
<C> <S>
10.18 -- Letter Agreement dated October 18, 1995 between Cameron
Communications Corporation and Mercury Information Technologies,
Inc.+
10.19 -- Act of Sale dated August 31, 1994 between Mercury, Inc. and
Mississippi One Cellular Telephone Company.+
10.20 -- US Unwired Inc. 1997 Stock Option Plan*
10.21 -- Commitment Letter dated October 24, 1996 from Rural Telephone
Financial Cooperative to Wireless Management Corporation+
10.22 -- Form of Stock Purchase Agreement between Mercury, Inc., David Bailey,
E. B. Martin, Jr., William M. Mounger, II, Robert M. Mounger, James
A. Murrell, III, William M. Yandall, III and Wirt A. Yeager, III+
11 -- Statement regarding computation of per share earnings+
21 -- List of Subsidiaries+
23.1 -- Consent of KPMG Peat Marwick LLP*
23.2 -- Consent of KPMG Peat Marwick LLP*
23.3 -- Consent of KPMG Peat Marwick LLP*
23.4 -- Consent of KPMG Peat Marwick LLP*
23.5 -- Consent of Smith, Turner & Reeves*
23.6 -- Consent of Elliot Goldberg CPA*
23.7 -- Consent of Correro Fishman Haygood Phelps Weiss Walmsley & Casteix,
L.L.P. (included in opinion filed as Exhibit 5.1)*
24.1 -- Powers of Attorney (included on the Signature Page)+
27.1 -- Financial Data Schedule+
</TABLE>
- ---------------
* Filed herewith.
+ Previously filed.
<PAGE> 1
Exhibit 1.1
[Form of Underwriting
Agreement]
1,700,000 Shares
US Unwired Inc.
Class A Common Stock
UNDERWRITING AGREEMENT
February __, 1997
THE ROBINSON-HUMPHREY COMPANY, INC.
A.G. EDWARDS & SONS, INC.
As representatives of the
several underwriters
named in Schedule I hereto
c/o The Robinson-Humphrey Company, Inc.
3333 Peachtree Road, N.E.
Atlanta, Georgia 30326
Dear Sirs:
US Unwired Inc., a Louisiana corporation (the "Company")
proposes to issue and sell 1,700,000 shares of its Class A Common Stock, par
value $.01 per share (the "Firm Shares") to the several underwriters named in
Schedule I hereto (the "Underwriters"). The Company also proposes to issue
and sell to the several Underwriters not more than 255,000 additional shares of
its Class A Common Stock, par value $.01 per share (the "Additional Shares") if
requested by the Underwriters as provided in Section 2 hereof. The Firm Shares
and the Additional Shares are herein collectively called the "Shares." The
shares of Class A Common Stock, par value $.01, and Class B Common Stock, par
value $.01, of the Company to be outstanding after giving effect to the sales
contemplated hereby are hereinafter referred to as the "Common Stock."
1. Registration Statement and Prospectus. The Company
has prepared and filed with the Securities and Exchange Commission (the
"Commission") in accordance with the provisions of the Securities Act of 1933,
as amended, and the rules and regulations of the Commission thereunder
(collectively called the "Act"), a registration statement on Form S-1 including
a prospectus relating to the Shares, which may be amended. The registration
<PAGE> 2
statement as amended at the time when it becomes effective, including a
registration statement (if any) filed pursuant to Rule 462(b) under the Act
increasing the size of the offering registered under the Act and information
(if any) deemed to be part of the registration statement at the time of
effectiveness pursuant to Rule 430A or Rule 434 under the Act, is hereinafter
referred to as the Registration Statement; and the prospectus including any
prospectus subject to completion taken together with any term sheet meeting the
requirements of Rule 434(b) or Rule 434(c) under the Act in the form first used
to confirm sales of Shares is hereinafter referred as the Prospectus.
2. Agreements to Sell and Purchase. On the basis of the
representations and warranties contained in this Agreement, and subject to its
terms and conditions, the Company agrees to issue and sell, and each
Underwriter agrees, severally and not jointly, to purchase from the Company at
a price per share of $______ (the "Purchase Price") the number of Firm Shares
set forth opposite the name of such Underwriter in Schedule I hereto.
On the basis of the representations and warranties contained
in this Agreement, and subject to its terms and conditions, the Company agrees
to issue and sell the Additional Shares and the Underwriters shall have the
right to purchase, severally and not jointly, up to 255,000 Additional Shares
from the Company at the Purchase Price. Additional Shares may be purchased
solely for the purpose of covering over-allotments made in connection with the
offering of the Firm Shares. The Underwriters may exercise their right to
purchase Additional Shares in whole or in part from time to time by giving
written notice thereof to the Company within 30 days after the date of this
Agreement. You shall give any such notice on behalf of the Underwriters and
such notice shall specify the aggregate number of Additional Shares to be
purchased pursuant to such exercise and the date for payment and delivery
thereof. The date specified in any such notice shall be a business day (i) no
earlier than the Closing Date (as hereinafter defined), (ii) no later than ten
business days after such notice has been given and (iii) no earlier than two
business days after such notice has been given. If any Additional Shares are
to be purchased, each Underwriter, severally and not jointly, agrees to
purchase from the Company the number of Additional Shares (subject to such
adjustments to eliminate fractional shares as you may determine) which bears
the same proportion to the total number of Additional Shares to be purchased
from the Company as the number of Firm Shares set forth opposite the name of
such Underwriter in Schedule I bears to the total number of Firm Shares.
The Company hereby agrees and the Company shall, concurrently
with the execution of this Agreement, deliver an agreement executed by (i) each
of the directors and officers of the Company, and (ii) each stockholder listed
on Annex I hereto, pursuant to which each such person agrees, not to offer,
sell, contract to sell, grant any option to purchase, or otherwise dispose of
any common stock of the Company or any securities convertible into or
exercisable or exchangeable for such common stock or in any other manner
transfer all or a portion of the economic consequences associated with the
ownership of any such common stock, except to the Underwriters pursuant to this
Agreement, for a period of 180 days after the date of the Prospectus without
the prior written consent of The Robinson-Humphrey Company, Inc.
Notwithstanding the foregoing, during such period (i) the Company may grant
stock options pursuant to the Company's 1997 Stock Option Plan and (ii) the
Company may issue shares of its common stock upon the exercise of an option or
warrant or the conversion of a security outstanding on the date hereof.
2
<PAGE> 3
3. Terms of Public Offering. The Company is advised by
you that the Underwriters propose (i) to make a public offering of their
respective portions of the Shares as soon after the effective date of the
Registration Statement as in your judgment is advisable and (ii) initially to
offer the Shares upon the terms set forth in the Prospectus.
4. Delivery and Payment. Delivery to the Underwriters
of and payment for the Firm Shares shall be made at 10:00 A.M., New York City
time, on the third or fourth business day following the date of the initial
public offering (the "Closing Date"), unless otherwise agreed by the parties
and permitted by the Commission pursuant to Rule 15c6-1 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") at such place as you
shall designate in the City of New York. The Closing Date and the location of
delivery of and the form of payment for the Firm Shares may be varied by
agreement between you and the Company.
Delivery to the Underwriters of and payment for any Additional
Shares to be purchased by the Underwriters shall be made at such place in the
City of New York as you shall designate at 10:00 A.M., New York City time, on
the date specified in the applicable exercise notice given by you pursuant to
Section 2 (an "Option Closing Date"). Any such Option Closing Date and the
location of delivery of and the form of payment for such Additional Shares may
be varied by agreement between you and the Company.
Certificates for the Shares shall be registered in such names
and issued in such denominations as you shall request in writing not later than
two full business days prior to the Closing Date or an Option Closing Date, as
the case may be. Such certificates shall be made available to you for
inspection not later than 9:30 A.M., New York City time, on the business day
next preceding the Closing Date or the applicable Option Closing Date, as the
case may be. Certificates in definitive form evidencing the Shares shall be
delivered to you on the Closing Date or the applicable Option Closing Date, as
the case may be, with any transfer taxes thereon duly paid by the Company, for
the respective accounts of the several Underwriters, against payment of the
Purchase Price therefor by wire or certified or official bank checks payable in
Federal funds to the order of the Company.
5. Agreements of the Company. The Company agrees with
you:
(a) To use its best efforts to cause the Registration
Statement to become effective at the earliest possible time.
(b) To advise you promptly and, if requested by you, to
confirm such advice in writing, (i) when the Registration Statement
has become effective and when any post-effective amendment to it
becomes effective, (ii) of any request by the Commission for
amendments to the Registration Statement or amendments or supplements
to the Prospectus or for additional information, (iii) of the issuance
by the Commission of any stop order suspending the effectiveness of
the Registration Statement or of the suspension of qualification of
the Shares for offering or sale in any jurisdiction, or the initiation
of any proceeding for such purposes, and (iv) of the happening of any
event during the period referred to in paragraph (e) below which makes
any statement of a material fact
3
<PAGE> 4
made in the Registration Statement or the Prospectus untrue or which
requires the making of any additions to or changes in the Registration
Statement or the Prospectus in order to make the statements therein
not misleading. If at any time the Commission shall issue any stop
order suspending the effectiveness of the Registration Statement, the
Company will make every reasonable effort to obtain the withdrawal or
lifting of such order at the earliest possible time.
(c) To furnish to you, without charge, three signed
copies of the Registration Statement as first filed with the
Commission and of each amendment to it, including all exhibits, and to
furnish to you and each Underwriter designated by you such number of
conformed copies of the Registration Statement as so filed and of each
amendment to it, without exhibits, as you may reasonably request.
(d) Not to file any amendment or supplement to the
Registration Statement, whether before or after the time when it
becomes effective, or to make any amendment or supplement to the
Prospectus (including the issuance or filings of any term sheet within
the meaning of Rule 434) of which you shall not previously have been
advised or to which you shall reasonably object; and to prepare and
file with the Commission, promptly upon your reasonable request, any
amendment to the Registration Statement or supplement to the
Prospectus (including the issuance or filings of any term sheet within
the meaning of Rule 434) which may be necessary or advisable in
connection with the distribution of the Shares by you, and to use its
best efforts to cause the same to become promptly effective.
(e) Promptly after the Registration Statement becomes
effective, and from time to time thereafter for such period as in the
opinion of counsel for the Underwriters a prospectus is required by
law to be delivered in connection with sales by an Underwriter or a
dealer, to furnish to each Underwriter and dealer as many copies of
the Prospectus (and of any amendment or supplement to the Prospectus)
as such Underwriter or dealer may reasonably request.
(f) If during the period specified in paragraph (e) any
event shall occur as a result of which, in the opinion of counsel for
the Underwriters it becomes necessary to amend or supplement the
Prospectus in order to make the statements therein, in the light of
the circumstances when the Prospectus is delivered to a purchaser, not
misleading, or if it is necessary to amend or supplement the
Prospectus to comply with any law, forthwith to prepare and file with
the Commission an appropriate amendment or supplement to the
Prospectus so that the statements in the Prospectus, as so amended or
supplemented, will not in the light of the circumstances when it is so
delivered, be misleading, or so that the Prospectus will comply with
law, and to furnish to each Underwriter and to such dealers as you
shall specify, such number of copies thereof as such Underwriter or
dealers may reasonably request.
(g) Prior to any public offering of the Shares, to
cooperate with you and counsel for the Underwriters in connection with
the registration or qualification of the Shares for offer and sale by
the several Underwriters and by dealers under the state
4
<PAGE> 5
securities or Blue Sky laws of such jurisdictions as you may request,
to continue such qualification in effect so long as required for
distribution of the Shares and to file such consents to service of
process or other documents as may be necessary in order to effect such
registration or qualification; provided, however, that the Company
shall not be required to register or qualify as a foreign corporation
in any jurisdiction where it is not now so qualified or to take any
action that would subject it to service of process in suits or
taxation, other than as to matters and transactions relating to the
offer and sale of the Shares, in any jurisdictions where it is not now
so subject.
(h) To mail and make generally available to its
stockholders as soon as reasonably practicable an earnings statement
covering a period of at least twelve months after the effective date
of the Registration Statement (but in no event commencing later than
90 days after such date) which shall satisfy the provisions of Section
11(a) of the Act and Rule 158 thereunder, and to advise you in writing
when such statement has been so made available.
(i) During the period of five years after the date of
this Agreement, (i) to mail as soon as reasonably practicable after
the end of each fiscal year to the record holders of its Common Stock
a financial report of the Company and its subsidiaries on a
consolidated basis (and a similar financial report of all
unconsolidated subsidiaries, if any, if required by Rule 3-09 of
Regulation S-X under the Act), all such financial reports to include a
consolidated balance sheet, a consolidated statement of operations, a
consolidated statement of cash flows and a consolidated statement of
shareholders' equity as of the end of and for such fiscal year,
together with comparable information as of the end of and for the
preceding year, certified by independent certified public accountants,
and (ii) to mail and make generally available as soon as practicable
after the end of each quarterly period (except for the last quarterly
period of each fiscal year) to such holders, a consolidated balance
sheet, a consolidated statement of operations and a consolidated
statement of cash flows (and similar financial reports of all
unconsolidated subsidiaries, if any, if required by Rule 3-09 of
Regulation S-X under the Act) as of the end of and for such period,
and for the period from the beginning of such year to the close of
such quarterly period, together with comparable information for the
corresponding periods of the preceding year.
(j) During the period referred to in paragraph (i), to
furnish to you as soon as available a copy of each report or other
publicly available information of the Company mailed to the holders of
Common Stock or filed with the Commission and such other publicly
available information concerning the Company and its subsidiaries as
you may reasonably request.
(k) To pay all costs, expenses, fees and taxes incident
to (i) the preparation, printing, filing and distribution under the
Act of the Registration Statement (including financial statements and
exhibits), each preliminary prospectus and all amendments and
supplements to any of them prior to or during the period specified in
paragraph (e), (ii) the printing and delivery of the Prospectus and
all amendments or supplements to it during the period specified in
paragraph (e), (iii) the printing and delivery of this
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<PAGE> 6
Agreement, the Preliminary and Supplemental Blue Sky Memoranda and all
other agreements, memoranda, correspondence and other documents
printed and delivered in connection with the offering of the Shares
(including in each case any disbursements of counsel for the
Underwriters relating to such printing and delivery), (iv) the
registration or qualification of the Shares for offer and sale under
the securities or Blue Sky laws of the several states (including in
each case the reasonable fees and disbursements of counsel for the
Underwriters relating to such registration or qualification and
memoranda relating thereto), (v) filings and clearance with the
National Association of Securities Dealers, Inc. in connection with
the offering, (vi) the listing of the Shares on the National
Association of Securities Dealers Automated Quotation system
("Nasdaq") National Market System and (vii) furnishing such copies of
the Registration Statement, the Prospectus and all amendments and
supplements thereto as may be requested for use in connection with the
offering or sale of the Shares by the Underwriters or by dealers to
whom Shares may be sold.
(l) To use its best efforts to maintain the inclusion of
such Common Stock in the Nasdaq National Market System (or on a
national securities exchange) for a period of five years after the
effective date of the Registration Statement.
(m) The Company will apply the net proceeds from the
offering of the Shares in the manner set forth under "Use of Proceeds"
in the Prospectus, and the Company will file timely and accurate
reports on Form SR with the Commission in accordance with Rule 463 of
the Commission under the Act or any successor provision.
(n) If at any time during the period beginning on the
date the Registration Statement becomes effective and ending on the
later of (i) the date 30 days after such effective date and (ii) the
date that is the earlier of (A) the date on which the Company first
files with the Commission its first Annual Report on Form 10-K after
such effective date and (B) the date on which the Company first issues
a quarterly financial report to shareholders after such effective
date, any rumor, publication or event relating to or affecting the
Company shall occur as a result of which in your reasonable opinion
the market price of the Common Stock has been or is likely to be
materially affected (regardless of whether such rumor, publication or
event necessitates an amendment of or supplement to the Prospectus),
the Company will, after written notice from you advising the Company
to the effect set forth above, forthwith prepare, consult with you
concerning the substance of, and disseminate a press release or other
public statement, reasonably satisfactory to you, responding to or
commenting on such rumor, publication or event.
(o) To use its best efforts to do and perform all things
required or necessary to be done and performed under this Agreement by
the Company prior to the Closing Date or any Option Closing Date, as
the case may be, and to satisfy all conditions precedent to the
delivery of the Shares.
6. Representations and Warranties of the Company. The
Company represents and warrants to each Underwriter that:
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<PAGE> 7
(a) The Registration Statement has become effective; no
stop order suspending the effectiveness of the Registration Statement
is in effect, and no proceedings for such purpose are pending before
or threatened by the Commission or the securities authority of any
state.
(b) (i) Each part of the Registration Statement, when
such part became effective, did not contain and each such part, as
amended or supplemented, if applicable, will not contain any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading, (ii) the Registration Statement and the Prospectus comply
and, as amended or supplemented, if applicable, will comply in all
material respects with the Act and (iii) the Prospectus does not
contain and, as amended or supplemented, if applicable, will not
contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading,
except that the representations and warranties set forth in this
paragraph (b) do not apply to statements or omissions in the
Registration Statement or the Prospectus based upon information
relating to any Underwriter furnished to the Company in writing by
such Underwriter through you expressly for use therein.
(c) Each preliminary prospectus filed as part of the
registration statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the Act, and each
Registration Statement filed pursuant to Rule 462(b) under the Act, if
any, complied when so filed in all material respects with the Act; and
did not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(d) The Company and each of its subsidiaries has been
duly incorporated, is validly existing as a corporation in good
standing under the laws of its jurisdiction of incorporation and has
the corporate power and authority to carry on its business as it is
currently being conducted, to own, lease and operate its properties,
and to enter into this Agreement and to perform its obligations
hereunder, and each is duly qualified and is in good standing as a
foreign corporation authorized to do business in each jurisdiction in
which the nature of its business or its ownership or leasing of
property requires such qualification, except where the failure to be
so qualified would not have a material adverse effect on the Company
and its subsidiaries, taken as a whole.
(e) All of the outstanding shares of capital stock of, or
other ownership interests in, each of the Company's subsidiaries have
been duly authorized and validly issued and are fully paid and
non-assessable, and are owned by the Company, free and clear of any
security interest, claim, lien, pledge, charge, defect, shareholders
agreement, voting trust, equity, encumbrance or adverse interest of
any nature.
(f) All the outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are fully
paid, non-assessable and not subject to any preemptive or similar
rights; and the Shares have been duly authorized and, when issued
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<PAGE> 8
and delivered to the Underwriters against payment therefor as provided
by this Agreement, will be validly issued, fully paid and
non-assessable, and the issuance of such Shares will not be subject to
any preemptive or similar rights.
(g) The authorized capital stock of the Company,
including the Common Stock, conforms as to legal matters to the
description thereof contained in the Prospectus.
(h) Neither the Company nor any of its subsidiaries is in
violation of its respective charter or by-laws or in default in the
performance of any obligation, agreement or condition contained in any
bond, debenture, note or any other evidence of indebtedness or in any
other agreement, indenture or instrument material to the conduct of
the business of the Company and its subsidiaries, taken as a whole, to
which the Company or any of its subsidiaries is a party or by which it
or any of its subsidiaries or their respective property is bound.
(i) The execution, delivery and performance of this
Agreement, compliance by the Company with all the provisions hereof
and the consummation of the transactions contemplated hereby will not
require any consent, approval, authorization or other order of any
court, regulatory body, administrative agency or other governmental
body (except as such may be required under the securities or Blue Sky
laws of the various states) and will not conflict with or constitute a
breach of any of the terms or provisions of, or a default under, the
charter or by-laws of the Company or any of its subsidiaries or any
agreement, indenture or other instrument to which it or any of its
subsidiaries is a party or by which it or any of its subsidiaries or
their respective property is bound, or violate or conflict with any
laws, administrative regulations or rulings or court decrees
applicable to the Company, any of its subsidiaries or their respective
property.
(j) Except as otherwise set forth in the Prospectus,
there are no material legal or governmental proceedings pending to
which the Company or any of its subsidiaries is a party or of which
any of their respective property is the subject, and, to the best of
the Company's knowledge, no such proceedings are threatened or
contemplated. No statute, contract or document of a character
required to be described in the Registration Statement or the
Prospectus or to be filed as an exhibit to the Registration Statement
is not so described or filed as required.
(k) Neither the Company nor any of its subsidiaries has
violated any foreign, federal, state or local law or regulation
relating to the protection of human health and safety, the environment
or hazardous or toxic substances or wastes, pollutants or contaminants
("Environmental Laws"), nor any federal or state law relating to
discrimination in the hiring, promotion or pay of employees nor any
applicable federal or state wages and hours laws, nor any provisions
of the Employee Retirement Income Security Act or the rules and
regulations promulgated thereunder, which in each case might result in
any material adverse change in the business, prospects, financial
condition or results of operation of the Company and its subsidiaries,
taken as a whole.
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<PAGE> 9
(l) The Company and each of its subsidiaries (i) has such
permits, licenses, franchises and authorizations of governmental or
regulatory authorities ("permits"), including, without limitation,
under any applicable Environmental Laws, as are necessary to own,
lease and operate its respective properties and to conduct its
business; and (ii) has fulfilled and performed all of its material
obligations with respect to such permits and no event has occurred
which allows, or after notice or lapse of time would allow, revocation
or termination thereof or results in any other material impairment of
the rights of the holder of any such permit; except, in the case of
clauses (i) and (ii), where failure to have such permits, the failure
to fulfill or perform such obligations or the revocation or
termination of any such permits would not, individually or in the
aggregate, result in a material adverse effect on the Company and its
subsidiaries taken as a whole. Except as described in the Prospectus,
such permits contain no restrictions that are materially burdensome to
the Company or any of its subsidiaries.
[(m) In the ordinary course of its business, the Company
conducts a periodic review of the effect of Environmental Laws on the
business, operations and properties of the Company and its
subsidiaries, in the course of which it identifies and evaluates
associated costs and liabilities (including, without limitation, any
capital or operating expenditures required for clean-up, closure of
properties or compliance with Environmental Laws or any permit,
license or approval, any related constraints on operating activities
and any potential liabilities to third parties). On the basis of such
review, the Company has reasonably concluded that such associated
costs and liabilities would not, singly or in the aggregate, have a
material adverse effect on the Company and its subsidiaries, taken as
a whole.]
(n) Except as otherwise set forth in the Prospectus or
such as are not material to the business, prospects, financial
condition or results of operation of the Company and its subsidiaries,
taken as a whole, the Company and each of its subsidiaries has good
and marketable title, free and clear of all liens, claims,
encumbrances and restrictions except liens for taxes not yet due and
payable, to all property and assets described in the Registration
Statement as being owned by it. All leases to which the Company or
any of its subsidiaries is a party are valid and binding and no
default has occurred or is continuing thereunder, which might result
in any material adverse change in the business, prospects, financial
condition or results of operation of the Company and its subsidiaries
taken as a whole, and the Company and its subsidiaries enjoy peaceful
and undisturbed possession under all such leases to which any of them
is a party as lessee with such exceptions as do not materially
interfere with the use made by the Company or such subsidiary.
(o) The Company and each of its subsidiaries maintains
reasonably adequate insurance.
(p) KMPG Peat Marwick LLP are independent public
accountants with respect to the Company as required by the Act.
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<PAGE> 10
(q) The financial statements, together with related
schedules and notes forming part of the Registration Statement and the
Prospectus (and any amendment or supplement thereto), present fairly
the consolidated financial position, results of operations and changes
in financial position of the Company and its subsidiaries on the basis
stated in the Registration Statement at the respective dates or for
the respective periods to which they apply; such statements and
related schedules and notes have been prepared in accordance with
generally accepted accounting principles consistently applied
throughout the periods involved, except as disclosed therein; and the
other financial and statistical information and data set forth in the
Registration Statement and the Prospectus (and any amendment or
supplement thereto) is, in all material respects, accurately presented
and prepared on a basis consistent with such financial statements and
the books and records of the Company.
(r) The Company is not an "investment company" or a
company "controlled" by an "investment company" within the meaning of
the Investment Company Act of 1940, as amended.
(s) Except as described in the Registration Statement, no
holder of any security of the Company has any right to require
registration of shares of Common Stock or any other security of the
Company.
(t) The Company has complied with all provisions of
Section 517.075, Florida Statutes (Chapter 92- 198, Laws of Florida).
(u) In the case of Rule 434(b) term sheets, such term
sheet and prospectus subject to completion provided by the Company to
the Underwriters for use in connection with the offering and sale of
the shares pursuant to Rule 434 under the Act together are not
materially different from the prospectus included in the Registration
at the time of effectiveness or an effective post-effective amendment
thereto and such term sheet sets forth all information material to
investors with respect to the offering that is not disclosed in the
prospectus subject to completion or the confirmation.
(v) There are no outstanding subscriptions, rights,
warrants, options, calls, convertible securities, commitments of sale
or liens related to or entitling any person to purchase or otherwise
to acquire any shares of the capital stock of, or other ownership
interest in, the Company or any subsidiary thereof except as otherwise
disclosed in the Registration Statement.
(w) Except as disclosed in the Prospectus, there are no
business relationships or related party transactions required to be
disclosed therein by Item 404 of Regulation S-K of the Commission.
(x) There is (i) no significant unfair labor practice
complaint pending against the Company or any of its subsidiaries or,
to the best knowledge of the Company, threatened against any of them,
before the National Labor Relations Board or any state or local labor
relations board, and no significant grievance or more significant
arbitration
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<PAGE> 11
proceeding arising out of or under any collective bargaining agreement
is so pending against the Company or any of its subsidiaries or, to
the best knowledge of the Company, threatened against any of them, and
(ii) no significant strike, labor dispute, slowdown or stoppage
pending against the Company or any of its subsidiaries or, to the best
knowledge of the Company, threatened against it or any of its
subsidiaries except for such actions specified in clause (i) or (ii)
above, which, singly or in the aggregate could not reasonably be
expected to have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
(y) The Company and each of its subsidiaries maintains a
system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance
with management's general or specific authorizations; (ii)
transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting
principles and to maintain asset accountability; (iii) access to
assets is permitted only in accordance with management's general or
specific authorization; and (iv) the recorded accountability for
assets is compared with the existing assets at reasonable intervals
and appropriate action is taken with respect to any differences.
(z) All material tax returns required to be filed by the
Company and each of its subsidiaries in any jurisdiction have been
filed, other than those filings being contested in good faith, and all
material taxes, including withholding taxes, penalties and interest,
assessments, fees and other charges due pursuant to such returns or
pursuant to any assessment received by the Company or any of its
subsidiaries have been paid, other than those being contested in good
faith and for which adequate reserves have been provided.
(aa) The Company has filed a registration statement
pursuant to Section 12(g) of the Exchange Act, to register the Common
Stock, has filed an application to list the Shares on the Nasdaq
National Market, and has received notification that the listing has
been approved, subject to notice of issuance of the Shares.
(ab) Since the date of the most recent audited financial
statements included in the Prospectus, neither the Company nor any of
its subsidiaries has sustained any material loss or interference with
its business from fire, explosion, flood or other calamity, whether or
not covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as disclosed in
or contemplated by the Prospectus.
(ac) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, (A) neither
the Company nor any of its subsidiaries has incurred any liabilities
or obligations, direct or contingent, or entered into any
transactions, not in the ordinary course of business, that are
material to the Company and its subsidiaries, taken as a whole, (B)
the Company has not purchased any of its outstanding capital stock or
declared, paid or otherwise made any dividend or distribution of any
kind on its capital stock, (C) there has not been any change in the
capital stock, long-term debt or short-term debt (other than changes
effected in the
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<PAGE> 12
ordinary course of business consistent with past practice) of the
Company or any of its subsidiaries, and (D) there has not been any
material adverse change, or any development involving a prospective
material adverse change, in or affecting the financial position,
results of operations or business of the Company and its subsidiaries
taken as a whole, in each case other than as disclosed in or
contemplated by the Prospectus.
(ad) All offers and sales of the Company's capital stock
prior to the date hereof within the period covered by Item 15 of Part
II of the Registration Statement were at all relevant times duly
registered under the Act or exempt from the registration requirements
thereof and were duly registered or the subject of an available
exemption from the registration requirements of the applicable state
securities or blue sky laws.
(ae) This Agreement has been duly authorized, executed and
delivered by the Company and constitutes the valid and binding
agreement of the Company enforceable against the Company in accordance
with its terms, subject, as to enforcement, to applicable bankruptcy,
insolvency, reorganization and moratorium laws and other laws relating
to or affecting the enforcement of creditors rights generally and to
general equitable principles and except as the enforceability of
rights to indemnity and contribution under this Agreement may be
limited under applicable securities laws or the public policy
underlying such laws.
(af) Neither the Company nor any of its officers,
directors or affiliates (A) has taken or will take or has induced or
will induce other to take, directly or indirectly, any action designed
to cause or result in, or that has constituted or might reasonably be
expected to constitute, the stabilization or manipulation of the price
of any security of the Company to facilitate the sale or resale of the
Shares or (B) has, since the filing of the Registration Statement (1)
sold, bid for, purchased or paid anyone any compensation for
soliciting purchases of, the Shares or (2) paid or agreed to pay to
any person any compensation for soliciting another to purchase any
other securities of the Company.
(ag) Neither the Company, any of its subsidiaries, nor any
director, officer, agent, employee or other person associated with or
acting on behalf of the Company or any such subsidiary has, directly
or indirectly, used any corporate funds for unlawful contributions,
gifts, entertainment or other unlawful expenses relating to political
activity; made any unlawful payment to foreign or domestic government
officials or employees or to foreign or domestic political parties or
campaigns from corporate funds; violated any provision of the Foreign
Corrupt Practices Act of 1977, as amended; or made any unlawful bribe,
rebate, payoff, influence payment, kickback or other unlawful payment.
(ah) The Company and its subsidiaries own or have the
right to use all patents, patent applications, trademarks, trademark
applications, tradenames, service marks, copyrights, franchises, trade
secrets, proprietary or other confidential information and intangible
properties and assets (collectively, "Intellectual Property")
necessary to their respective businesses as presently conducted or as
the Prospectus indicates the Company or such subsidiary proposes to
conduct; to the best knowledge of the Company, neither the Company nor
any subsidiary has infringed or is infringing, and neither the Company
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nor any subsidiary has received notice of infringement with respect
to, asserted Intellectual Property of others; and, to the best
knowledge of the Company, there is no infringement by others of the
Intellectual Property of the Company or any of its subsidiaries.
(ai) No subsidiary of the Company is currently prohibited,
directly or indirectly, from paying any dividends to the Company, from
making any other distributions on such subsidiary's capital stock,
from repaying to the Company any loans or advances to such subsidiary
or from transferring any of such subsidiary's property or assets to
the Company or any other subsidiary of the Company, except as
disclosed in the Prospectus.
(aj) The Company and each of its subsidiaries validly
holds all Federal Communications Commission ("FCC") licenses necessary
for the operation of its cellular Systems, as identified in the
Prospectus (the "Cellular Licenses"). The Cellular Licenses are in
full force and effect and are not subject to any conditions other than
those conditions listed thereon and those conditions generally
applicable to entities holding similar licenses issued by the FCC.
The Cellular Licenses constitute all of the licenses, permits,
consents or authorizations required by the FCC to permit operation of
a cellular telephone system in each of its Cellular Systems, as
identified in the Prospectus. The Cellular Licenses expire on the
following dates: [insert dates]. The five-year build-out periods for
the Cellular Systems expire[d] on [insert dates].
(ak) There are no judgments, decrees or orders issued by
the FCC that could result in a suspension, revocation, material
impairment, termination prior to its expiration date, non-renewal or
adverse modification of the Cellular Licenses, or that could have a
material adverse effect upon, or cause material disruption to, the
cellular operations pursuant to the Cellular Licenses. To the best of
the Company's knowledge, there is no complaint, investigation, action
or proceeding pending or threatened relative to the Cellular Licenses
relating to its cellular operations, including, without limitation,
any Notice of Violation, Notice of Apparent Liability or Order to Show
Cause, other than proceedings that affect the cellular telephone
industry generally, that could result in a suspension, revocation,
material impairment, termination prior to its expiration date,
non-renewal or adverse modification of the Cellular Licenses or which
could have a material adverse effect upon, or cause material
disruption to, the cellular operations in any of the Cellular Systems.
(al) The Company and each of its subsidiaries has, or has
timely filed applications for, all permits, licenses, franchises and
other authorizations ("permits") of governmental or regulatory
authorities (including, as appropriate, the state public utilities
commissions of Louisiana, Kansas, Oklahoma, Mississippi, Alabama and
Texas) necessary to engage in the wireless businesses currently
conducted by the Company, except where the failure to hold such
permits would not have a material adverse effect on the Company and
its subsidiaries, taken as a whole; and there is no reason to believe
that any governmental body or agency is considering limiting,
suspending or revoking any such permit. All such permits are valid
and in full force and effect. Such counsel
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<PAGE> 14
has not represented the Company or its subsidiaries with respect to,
and has not reviewed, the leases to which the Company or any of its
subsidiaries is a party.
(am) Meretel Communications Limited Partnership (the "PCS
Partnership") was the winning bidder, and its applications (the "PCS
Applications") have been accepted for filing, for the following PCS
C-block BTAs: Baton Rouge, LA (BTA #032), Beaumont, TX (BTA #034),
Hammond, LA (BTA #180), Lafayette, LA (BTA #236), and Lufkin, TX (BTA
#265), collectively, the "PCS Systems." The PCS Applications have
been granted by the FCC, and licenses have been issued (the "PCS
Licenses"). All applicable administrative and judicial appeal, review
and reconsideration periods of the orders granting the PCS Licenses
have expired, without the timely filing of any such appeal or request
for review or reconsideration and without the FCC having instituted
review of the grant of the PCS Licenses on its own motion.
(an) Mercury Mobility, L.L.C. ("Mobility") was the winning
bidder, and its PCS Applications have been accepted for filing, for
the following PCS D, E and F-block BTAs:________________. The PCS
Applications with respect to the PCS D, E, and F-block BTAs are
pending before the FCC.
(ao) The PCS Licenses are in full force and effect and are
not subject to any conditions other than those conditions listed
thereon and those conditions generally applicable to entities holding
similar licenses issued by the FCC. The PCS Licenses constitute all
of the licenses, permits, consents or authorizations required by the
FCC to permit operation of a C-Block PCS system in each of its PCS
Systems. The PCS Licenses expire on the following dates: [insert
dates]. The five-year build-out periods for the PCS Systems expire
on [insert dates], and the ten-year build-out periods expire on
[insert dates].
(ap) The Company knows of no FCC complaint, investigation,
action or proceeding pending or threatened relative to the PCS
Applications or Licenses or the PCS Systems, including, without
limitation, any Notice of Violation, Notice of Apparent Liability or
Order to Show Cause, other than proceedings that affect the PCS
industry generally, that could result in a denial of any of the PCS
Applications, or suspension, revocation, material impairment,
termination prior to its expiration date, non-renewal or adverse
modification of any licenses granted pursuant to the PCS Applications
or which could have a material adverse effect upon, or cause material
disruption to, the PCS operations in any of the PCS Systems.
(aq) The PCS Partnership has timely paid all fees required
by the FCC in connection with the PCS Applications, including any and
all down payments required by FCC rules to be paid as of the date
hereof.
(ar) The Company and each of its subsidiaries validly
holds all FCC licenses necessary for the operation of its paging
system within the Louisiana Cluster in the 158.10 MHz and 152.84 MHz
range, as identified in the Prospectus (the "Paging Licenses"). The
Paging Licenses are in full force and effect and are not subject to
any
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<PAGE> 15
conditions other than those conditions listed thereon and those
conditions generally applicable to entities holding similar licenses
issued by the FCC. The Paging Licenses constitute all of the
licenses, permits, consents or authorizations required by the FCC to
permit operation of a paging system in the Louisiana Cluster.
(as) There does not exist any FCC complaint,
investigation, action or proceeding pending or threatened relative to
the Paging Licenses, including, without limitation, any Notice of
Violation, Notice of Apparent Liability or Order to Show Cause, other
than proceedings that affect the paging industry generally, that could
result in a denial of any of the Paging Licenses, or suspension,
revocation, material impairment, termination prior to its expiration
date, non-renewal or adverse modification of any of the Paging
Licenses or which could have a material adverse effect upon, or cause
material disruption to, the Paging operations in any of the Paging
Licenses.
(at) The PCS Partnership was qualified to participate in
the FCC's C-Block auctions as a "Small Business," as defined by FCC
Rules, and is qualified to hold the licenses for the PCS Systems
according to the rules of the FCC. The Company's investment in the
PCS Partnership does not violate the rules of the FCC.
7. Indemnification.
(a) The Company agrees to indemnify and hold harmless
each Underwriter and each person, if any, who controls any Underwriter
within the meaning of Section 15 of the Act or Section 20 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), from
and against any and all losses, claims, damages, liabilities and
judgments caused by any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement or the
Prospectus (as amended or supplemented if the Company shall have
furnished any amendments or supplements thereto) or any preliminary
prospectus, or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, and will reimburse each
Underwriter for any legal or other expenses reasonably incurred by
such Underwriter in connection with investigating, defending against
or appearing as a third-party witness in connection with any such
loss, claim, damage, liability or judgment, except insofar as such
losses, claims, damages, liabilities or judgments are caused by any
such untrue statement or omission or alleged untrue statement or
omission based upon information relating to any Underwriters furnished
in writing to the Company by or on behalf of any Underwriter through
you expressly for use therein; provided, however, that the foregoing
indemnity agreement with respect to any preliminary prospectus shall
not inure to the benefit of any Underwriter from whom the person
asserting any such losses, claims, damages and liabilities and
judgments purchased Shares, or any person controlling such
Underwriter, if a copy of the Prospectus (as then amended or
supplemented if the Company shall have furnished any amendments or
supplements thereto) was not sent or given by or on behalf of such
Underwriter to such person, if required by law so to have been
delivered, at or prior to the written confirmation of the sale of the
Shares to such person, and if the Prospectus
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<PAGE> 16
(as so amended and supplemented) would have cured the defect giving
rise to such loss, claim, damage, liability or judgment.
(b) In case any action shall be brought against any
Underwriter or any person controlling such Underwriter, based upon any
preliminary prospectus, the Registration Statement or the Prospectus
or any amendment or supplement thereto and with respect to which
indemnity may be sought against the Company, such Underwriter shall
promptly notify the Company in writing and the Company shall assume
the defense thereof, including the employment of counsel reasonably
satisfactory to such indemnified party and payment of all fees and
expenses, but the omission to so notify the Company shall not relieve
the Company from any liability which it may have to the Underwriters
otherwise than under this subsection. Any Underwriter or any such
controlling person shall have the right to employ separate counsel in
any such action and participate in the defense thereof, but the fees
and expenses of such counsel shall be at the expense of such
Underwriter or such controlling person unless (i) the employment of
such counsel shall have been specifically authorized in writing by the
Company, (ii) the Company shall have failed to assume the defense and
employ counsel or (iii) the named parties to any such action
(including any impleaded parties) include both such Underwriter or
such controlling person and the Company and such Underwriter or such
controlling person shall have been advised by such counsel that there
may be one or more legal defenses available to it which are different
from or additional to those available to the Company (in which case
the Company shall not have the right to assume the defense of such
action on behalf of such Underwriter or such controlling person, it
being understood, however, that the Company shall not, in connection
with any one such action or separate but substantially similar or
related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the fees and
expenses of more than one separate firm of attorneys (in addition to
any local counsel) for all such Underwriters and controlling persons,
which firm shall be designated in writing by The Robinson-Humphrey
Company, Inc. and that all such fees and expenses shall be reimbursed
as they are incurred). The Company shall not be liable for any
settlement of any such action effected without its written consent but
if settled with the written consent of the Company, the Company agrees
to indemnify and hold harmless any Underwriter and any such
controlling person from and against any loss or liability by reason of
such settlement. No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement of any
pending or threatened proceeding in respect of which any indemnified
party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement
includes an unconditional release of such indemnified party from all
liability on claims that are the subject matter of such proceeding.
(c) Each Underwriter agrees, severally and not jointly,
to indemnify and hold harmless the Company, its directors, its
officers who sign the Registration Statement and any person
controlling the Company within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, to the same extent as the foregoing
indemnity from the Company to each Underwriter but only with reference
to information relating to such Underwriter furnished in writing by or
on behalf of such Underwriter through you
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<PAGE> 17
expressly for use in the Registration Statement, the Prospectus or any
preliminary prospectus. In case any action shall be brought against
the Company, any of its directors, any such officer or any person
controlling the Company based on the RegistrationStatement, the
Prospectus or any preliminary prospectus and in respect of which
indemnity may be sought against any Underwriter, the Underwriter shall
have the rights and duties given to the Company (except that if the
Company shall have assumed the defense thereof, such Underwriter shall
not be required to do so, but may employ separate counsel therein and
participate in the defense thereof but the fees and expenses of such
counsel shall be at the expense of such Underwriter), and the Company,
its directors, any such officers and any person controlling the
Company shall have the rights and duties given to the Underwriter, by
Section 7(b) hereof.
(d) If the indemnification provided for in this Section 7
is unavailable to an indemnified party in respect of any losses,
claims, damages, liabilities or judgments referred to therein, then
each indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages,
liabilities and judgments (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company on the one hand
and the Underwriters on the other hand from the offering of the Shares
or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above
but also the relative fault of the Company and the Underwriters in
connection with the statements or omissions which resulted in such
losses, claims, damages, liabilities or judgments, as well as any
other relevant equitable considerations. The relative benefits
received by the Company and the Underwriters shall be deemed to be in
the same proportion as the total net proceeds from the offering
(before deducting expenses) received by the Company, and the total
underwriting discounts and commissions received by the Underwriters,
bear to the total price to the public of the Shares, in each case as
set forth in the table on the cover page of the Prospectus. The
relative fault of the Company and the Underwriters shall be determined
by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission to state a
material fact relates to information supplied by the Company or the
Underwriters and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission.
The Company and the Underwriters agree that it would not be
just and equitable if contribution pursuant to this Section 7(d) were
determined by pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, liabilities or judgments referred to in
the immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 7, no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Shares underwritten by it and distributed
to the public were offered to
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<PAGE> 18
the public exceeds the amount of any damages which such Underwriter has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute pursuant to
this Section 7(d) are several in proportion to the respective number of Shares
purchased by each of the Underwriters hereunder and not joint.
8. Conditions of Underwriters' Obligations. The several
obligations of the Underwriters to purchase the Firm Shares under this
Agreement are subject to the satisfaction of each of the following conditions:
(a) All the representations and warranties of the Company
contained in this Agreement shall be true and correct on the Closing
Date with the same force and effect as if made on and as of the
Closing Date.
(b) The Registration Statement shall have become
effective not later than 5:00 P.M. (and in the case of a Registration
Statement filed under Rule 462 (b) of the Act, not later than 10:00
P.M.), New York City time, on the date of this Agreement or at such
later date and time as you may approve in writing, and at the Closing
Date no stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose
shall have been commenced or shall be pending before or contemplated
by the Commission.
(c) (i) Since the date of the latest balance sheet
included in the Registration Statement and the Prospectus, there shall
not have been any material adverse change, or any development
involving a prospective material adverse change, in the condition,
financial or otherwise, or in the earnings, affairs or business
prospects, whether or not arising in the ordinary course of business,
of the Company, (ii) since the date of the latest balance sheet
included in the Registration Statement and the Prospectus there shall
not have been any change, or any development involving a prospective
material adverse change, in the capital stock or in the long-term debt
of the Company from that set forth in the Registration Statement and
Prospectus, (iii) the Company and its subsidiaries shall have no
liability or obligation, direct or contingent, which is material to
the Company and its subsidiaries, taken as a whole, other than those
reflected in the Registration Statement and the Prospectus and (iv) on
the Closing Date you shall have received a certificate dated the
Closing Date, signed by Robert Piper and Dusty Dumas, in their
capacities as the President and Chief Financial Officer of the
Company, respectively, confirming the matters set forth in paragraphs
(a), (b), and (c) of this Section 8.
(d) You shall have received on the Closing Date an
opinion (satisfactory to you and counsel for the Underwriters), dated
the Closing Date, of Correro Fishman Haygood Phelps Weiss Walmsley &
Casteix, L.L.P., counsel for the Company, to the effect that:
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<PAGE> 19
(i) the Company and each of its subsidiaries
has been duly incorporated, is validly existing as a
corporation in good standing under the laws of its
jurisdiction of incorporation and has the corporate power and
authority required to carry on its business as described in
the Registration Statement and to own, lease and operate its
properties as described in the Registration Statement;
(ii) the Company and each of its
subsidiaries is duly qualified and is in good standing as a
foreign corporation authorized to do business in each
jurisdiction in which the nature of its business or its
ownership or leasing of property requires such qualification,
except where the failure to be so qualified would not have a
material adverse effect on the Company and its subsidiaries,
taken as a whole;
(iii) all of the outstanding shares of
capital stock of, or other ownership interests in, each of the
Company's subsidiaries have been duly and validly authorized
and issued and are fully paid and non-assessable, and are
owned by the Company, free and clear of any security interest,
claim, lien, encumbrance or adverse interest of any nature;
(iv) all the outstanding shares of Common
Stock have been duly authorized and validly issued and are
fully paid, non-assessable and not subject to any preemptive
or similar rights;
(v) the Shares have been duly authorized,
and when issued and delivered to the Underwriters against
payment therefor as provided by this Agreement, will have been
validly issued and will be fully paid and non-assessable, and
the issuance of such Shares is not subject to any preemptive
or similar rights;
(vi) this Agreement has been duly
authorized, executed and delivered by the Company and is a
valid and binding agreement of the Company enforceable in
accordance with its terms (except as rights to indemnity and
contribution hereunder may be limited by applicable law and
except as (i) the enforceability thereof may be limited by
bankruptcy, insolvency or similar laws affecting creditors
rights generally and (ii) rights of acceleration and the
availability of equitable remedies may be limited by equitable
principles of general applicability);
(vii) the authorized capital stock of the
Company, including the Common Stock, conforms as to legal
matters to the description thereof contained in the
Prospectus;
(viii) the Registration Statement has become
effective under the Act, no stop order suspending its
effectiveness has been issued and no proceedings for that
purpose are, to the knowledge of such counsel, pending before
or contemplated by the Commission;
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<PAGE> 20
(ix) the statements under the captions
"Dividend Policy", "Management--1997 Stock Option Plan",
"Certain Transactions", "Description of Capital Stock",
"Shares Eligible for Future Sale" and "Underwriting" in the
Prospectus and Items 14 and 15 of Part II of the Registration
Statement insofar as such statements constitute a summary of
legal matters, documents or proceedings referred to therein,
fairly present the information called for with respect to such
legal matters, documents and proceedings;
(x) to such counsel's knowledge, neither the
Company nor any of its subsidiaries is (i) in violation of its
respective charter or by-laws or (ii) in default in the
performance of any obligation, agreement or condition
contained in any bond, debenture, note or any other evidence
of indebtedness or in any other agreement, indenture or
instrument material to the conduct of the business of the
Company and its subsidiaries, taken as a whole, to which the
Company or any of its subsidiaries is a party or by which it
or any of its subsidiaries or their respective property is
bound;
(xi) the execution, delivery and performance
of this Agreement by the Company, compliance by the Company
with all the provisions hereof and the consummation of the
transactions contemplated hereby will not require any consent,
approval, authorization or other order of any court,
regulatory body, administrative agency or other governmental
body (except as such may be required under the Act or other
securities or Blue Sky laws) and will not conflict with or
constitute a breach of any of the terms or provisions of, or a
default under, the charter or by-laws of the Company or any of
its subsidiaries, or any agreement, indenture or other
instrument known by such counsel to which the Company or any
of its subsidiaries is a party or by which the Company or any
of its subsidiaries or their respective properties are bound,
or violate or conflict with any laws, administrative
regulations or rulings or court decrees applicable to the
Company or any of its subsidiaries or their respective
properties;
(xii) such counsel does not know of any
legal or governmental proceeding pending or threatened to
which the Company or any of its subsidiaries is a party or to
which any of their respective property is subject which is
required to be described in the Registration Statement or the
Prospectus and is not so described, or of any contract or
other document which is required to be described in the
Registration Statement or the Prospectus or is required to be
filed as an exhibit to the Registration Statement which is not
described or filed as required;
(xiii) to such counsel's knowledge, neither
the Company nor any of its subsidiaries has violated any
Environmental Laws, nor any federal or state law relating to
discrimination in the hiring, promotion or pay of employees
nor any applicable federal or state wages and hours laws, nor
any provisions of the Employee Retirement Income Security Act
or the rules and regulations promulgated thereunder, which in
each case might result in any material adverse
20
<PAGE> 21
change in the business, prospects, financial condition or
results of operation of the Company and its subsidiaries,
taken as a whole;
(xiv) such counsel is not aware of any
failure by the Company or any of its subsidiaries to hold such
permits, licenses, franchises and authorizations of
governmental or regulatory authorities ("permits"), including,
without limitation, under any applicable Environmental Laws,
as are necessary to own, lease and operate its respective
properties and to conduct its business in the manner described
in the Prospectus; such counsel is not aware of any failure by
the Company or any of its subsidiaries to fulfill and perform
any of its material obligations with respect to such permits
and such counsel is not aware of any event that has occurred
which allows, or after notice or lapse of time would allow,
revocation or termination thereof or results in any other
material impairment of the rights of the holder of any such
permit, subject in each case to such qualification as may be
set forth in the Prospectus; and, except as described in the
Prospectus, such permits are not known by such counsel to
contain any restrictions that are materially burdensome to the
Company or any of its subsidiaries;
(xv) the Company is not an "investment
company" or a company "controlled" by an "investment company"
within the meaning of the Investment Company Act of 1940, as
amended;
(xvi) to such counsel's knowledge, except as
described in the Prospectus, no holder of any security of the
Company has any right to require registration of shares of
Common Stock or any other security of the Company;
(xvii) except as otherwise set forth in the
Registration Statement or such as are not material to the
business, prospects, financial condition or results of
operation of the Company and its subsidiaries, taken as a
whole, such counsel has no reason to believe that the Company
and each of its subsidiaries do not have good and marketable
title, free and clear of all liens, claims, encumbrances and
restrictions except liens for taxes not yet due and payable,
to all property and assets described in the Registration
Statement as being owned by it;
(xviii) such counsel has no reason to
believe that any material lease to which the Company or any of
its subsidiaries is a party is not valid and binding or that
any default has occurred or is continuing thereunder, which
might result in any material adverse change in the business,
prospects, financial condition or results of operation of the
Company and its subsidiaries taken as a whole, or that the
Company and its subsidiaries do not enjoy peaceful and
undisturbed possession under all such leases to which any of
them is a party as lessee with such exceptions as do not
materially interfere with the use made by the Company or such
subsidiary;
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<PAGE> 22
(xix) except as disclosed in the
Prospectus, to such counsel's knowledge and there are no
outstanding (A) securities or obligations of the Company or an
of its subsidiaries convertible into or exchangeable for any
capital stock of the Company or any such subsidiary, (B)
warrants, rights or options to subscribe for or purchase from
the Company or any such subsidiary any such capital stock or
any such convertible or exchangeable securities or
obligations, or (C) obligations of the Company or any such
subsidiary to issue any shares of capital stock, any such
convertible or exchangeable securities or obligations, or any
such warrants, rights or options.
(xx) all offers and sales of the
Company's capital stock known to such counsel prior to the
date hereof within the period covered by Item 15 of Part II of
the Registration Statement were at all relevant times duly
registered under the Act or exempt from the registration
requirements thereof.
(xxi) the Registration Statement
(including any Registration Statement filed under Rule 462 (b)
under the Act, if any) and the Prospectus and any supplement
or amendment thereto (except for financial statements and
other financial data as to which no opinion need be expressed)
comply as to form in all material respects with the Act. In
addition, such counsel shall state that (except for financial
statements and other financial data, as aforesaid), such
counsel, while not passing upon, or assuming any
responsibility for, the accuracy, completeness or fairness of
the statements contained in the Registration Statement or the
Prospectus, has no reason to believe that the Registration
Statement and the prospectus included therein at the time the
Registration Statement became effective contained any untrue
statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading, and that the Prospectus, as
amended or supplemented, if applicable (except for financial
statements and other financial data, as aforesaid) contained
any untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements
therein, in the light of the circumstances under which they
were made, not misleading;
In giving such opinion with respect to the matters covered by
clause (xxi) such counsel may state that their opinion and belief are based
upon their participation in the preparation of the Registration Statement and
Prospectus and any amendments or supplements thereto and review and discussion
of the contents thereof, but are without independent check or verification
except as specified.
The opinion of Correro Fishman Haygood Phelps Weiss Walmsley &
Casteix, L.L.P. described in paragraph (d) above shall be rendered to you at
the request of the Company and shall so state therein and shall be limited to
the laws of the United States of America and those of the state of Louisiana.
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<PAGE> 23
(e) You shall have received on the Closing Date an
opinion (satisfactory to you and counsel for the Underwriters), dated
the Closing Date, of [FCC counsel], counsel for the Company, to the
effect that:
(i) The statements in the Prospectus
under the captions "Risk Factors - Government Regulation," and
"Business of the Company," insofar as such statements
constitute a summary of Communications Act of 1934, as
amended, and the rules and regulations promulgated thereunder
(the"Communications Act"), fairly and accurately summarize the
matters therein described.
(ii) The Company and each of its
subsidiaries validly holds all Cellular Licenses. The
Cellular Licenses are in full force and effect and are not
subject to any conditions other than those conditions listed
thereon and those conditions generally applicable to entities
holding similar licenses issued by the FCC. The Cellular
Licenses constitute all of the licenses, permits, consents or
authorizations required by the FCC to permit operation of a
cellular telephone system in each of its Cellular Systems, as
identified in the Prospectus. The Cellular Licenses expire on
the following dates: [insert dates]. The five-year
build-out periods for the Cellular Systems expire[d] on
[insert dates].
(iii) There are no judgments, decrees or
orders issued by the FCC that could result in a suspension,
revocation, material impairment, termination prior to its
expiration date, non- renewal or adverse modification of the
Cellular Licenses, or that could have a material adverse
effect upon, or cause material disruption to, the cellular
operations pursuant to the Cellular Licenses. To the best of
the Company's knowledge, there is no complaint, investigation,
action or proceeding pending or threatened relative to the
Cellular Licenses relating to its cellular operations,
including, without limitation, any Notice of Violation, Notice
of Apparent Liability or Order to Show Cause, other than
proceedings that affect the cellular telephone industry
generally, that could result in a suspension, revocation,
material impairment, termination prior to its expiration date,
non-renewal or adverse modification of the Cellular Licenses
or which could have a material adverse effect upon, or cause
material disruption to, the cellular operations in any of the
Cellular Systems.
(iv) The Company and each of its
subsidiaries has, or has timely filed applications for, all
permits, licenses, franchises and other authorizations
("permits") of governmental or regulatory authorities
(including, as appropriate, the state public utilities
commissions of Louisiana, Kansas, Oklahoma, Mississippi,
Alabama and Texas) necessary to engage in the wireless
businesses currently conducted by the Company, except where
the failure to hold such permits would not have a material
adverse effect on the Company and its subsidiaries, taken as a
whole; and there is no reason to believe that any governmental
body or agency is considering limiting, suspending or revoking
any such permit. All such permits are valid and in full force
and effect. Such
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<PAGE> 24
counsel has not represented the Company or its subsidiaries
with respect to, and has not reviewed, the leases to which the
Company or any of its subsidiaries is a party.
(v) The PCS Partnership was the
winning bidder, and the PCS Applications have been accepted
for filing, for the following PCS C-block BTAs: Baton Rouge,
LA (BTA #032), Beaumont, TX (BTA #034), Hammond, LA (BTA
#180), Lafayette, LA (BTA #236), and Lufkin, TX (BTA #265),
collectively, the "PCS Systems." The PCS Applications have
been granted by the FCC, and PCS Licenses have been issued.
All applicable administrative and judicial appeal, review and
reconsideration periods of the orders granting the PCS
Licenses have expired, without the timely filing of any such
appeal or request for review or reconsideration and without
the FCC having instituted review of the grant of the PCS
Licenses on its own motion.
(vi) Mobility was the winning bidder,
and the PCS Applications have been accepted for filing, for
the following PCS D, E and F-block BTAs: _____________. The
PCS Applications with respect to the D, E and F-block BTAs are
pending before the FCC.
(vii) The PCS Licenses are in full force
and effect and are not subject to any conditions other than
those conditions listed thereon and those conditions generally
applicable to entities holding similar licenses issued by the
FCC. The PCS Licenses constitute all of the licenses,
permits, consents or authorizations required by the FCC to
permit operation of a C-Block PCS system in each of its PCS
Systems. The PCS Licenses expire on the following dates:
[insert dates]. The five-year build-out periods for the PCS
Systems expire on [insert dates], and the ten-year build-out
periods expire on [insert dates].
(viii) The Company knows of no FCC
complaint, investigation, action or proceeding pending or
threatened relative to the PCS Applications or Licenses or the
PCS Systems, including, without limitation, any Notice of
Violation, Notice of Apparent Liability or Order to Show
Cause, other than proceedings that affect the PCS industry
generally, that could result in a denial of any of the PCS
Applications, or suspension, revocation, material impairment,
termination prior to its expiration date, non-renewal or
adverse modification of any licenses granted pursuant to the
PCS Applications or which could have a material adverse effect
upon, or cause material disruption to, the PCS operations in
any of the PCS Systems.
(ix) The PCS Partnership has timely paid
all fees required by the FCC in connection with the PCS
Applications, including any and all down payments required by
FCC rules to be paid as of the date hereof.
(x) The Company and each of its
subsidiaries validly holds all Paging Licenses necessary for
the operation of its paging system within the Louisiana
24
<PAGE> 25
Cluster in the 158.10 MHz and 152.84 MHz range, as identified
in the Prospectus. The Paging Licenses are in full force and
effect and are not subject to any conditions other than those
conditions listed thereon and those conditions generally
applicable to entities holding similar licenses issued by the
FCC. The Paging Licenses constitute all of the licenses,
permits, consents or authorizations required by the FCC to
permit operation of a paging system in the Louisiana Cluster.
(xi) Such counsel has no knowledge of
any FCC complaint, investigation, action or proceeding pending
or threatened relative to the Paging Licenses, including,
without limitation, any Notice of Violation, Notice of
Apparent Liability or Order to Show Cause, other than
proceedings that affect the paging industry generally, that
could result in a denial of any of the Paging Licenses, or
suspension, revocation, material impairment, termination prior
to its expiration date, non-renewal or adverse modification of
any of the Paging Licenses or which could have a material
adverse effect upon, or cause material disruption to, the
Paging operations in any of the Paging Licenses.
(xii) The PCS Partnership was qualified to
participate in the FCC's C-Block auctions as a "Small
Business," as defined by FCC Rules, and is qualified to hold
the licenses for the PCS Systems according to the rules of the
FCC. The Company's investment in the PCS Partnership does not
violate the rules of the FCC.
(f) You shall have received on the Closing Date an
opinion, dated the Closing Date, of Latham & Watkins, counsel for the
Underwriters, as to the matters referred to in clauses (v), (vi),
(viii), (ix) (but only with respect to the statements under the
caption "Description of Capital Stock" and "Underwriting") and (xxi)
of the foregoing paragraph (d). In giving such opinion with respect
to the matters covered by clause (xix) such counsel may state that
their opinion and belief are based upon their participation in the
preparation of the Registration Statement and Prospectus and any
amendments or supplements thereto and review and discussion of the
contents thereof, but are without independent check or verification
except as specified.
(g) You shall have received a letter on and as of the
Closing Date, in form and substance satisfactory to you, from KMPG
Peat Marwick LLP, independent public accountants, with respect to the
financial statements and certain financial information contained in
the Registration Statement and the Prospectus and substantially in the
form and substance of the letter delivered to you by KMPG Peat Marwick
LLP on the date of this Agreement.
(h) The Company shall have delivered to you the
agreements specified in Section 2 hereof.
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<PAGE> 26
(i) The Company shall not have failed at or prior to the
Closing Date to perform or comply with any of the agreements herein
contained and required to be performed or complied with by the Company
at or prior to the Closing Date.
The several obligations of the Underwriters to purchase any Additional Shares
hereunder are subject to the delivery to you on the applicable Option Closing
Date of such documents as you may reasonably request with respect to the good
standing of the Company, the due authorization and issuance of such Additional
Shares and other matters related to the issuance of such Additional Shares.
9. Effective Date of Agreement and Termination. This
Agreement shall become effective upon the later of (i) execution of this
Agreement and (ii) when notification of the effectiveness of the Registration
Statement has been released by the Commission.
This Agreement may be terminated at any time prior to the
Closing Date by you by written notice to the Company if any of the following
has occurred: (i) since the respective dates as of which information is given
in the Registration Statement and the Prospectus, any material adverse change
or development involving a prospective material adverse change in the
condition, financial or otherwise, of the Company and its subsidiaries, taken
as a whole, or the earnings, affairs, or business prospects of the Company or
any of its subsidiaries, taken as a whole, whether or not arising in the
ordinary course of business, which would, in your judgment, make it
impracticable to market the Shares on the terms and in the manner contemplated
in the Prospectus, (ii) any outbreak or escalation of hostilities or other
national or international calamity or crisis or change in economic conditions
or in the financial markets of the United States or elsewhere that, in your
judgment, is material and adverse and would, in your judgment, make it
impracticable to market the Shares on the terms and in the manner contemplated
in the Prospectus, (iii) the suspension or material limitation of trading in
securities on the New York Stock Exchange, the American Stock Exchange or the
Nasdaq National Market System or limitation on prices for securities on any
such exchange or National Market System, (iv) the enactment, publication,
decree or other promulgation of any federal or state statute, regulation, rule
or order of any court or other governmental authority which in your opinion
materially and adversely affects, or will materially and adversely affect, the
business or operations of the Company and its subsidiaries taken as a whole,
(v) the declaration of a banking moratorium by either federal or New York State
authorities or (vi) the taking of any action by any federal, state or local
government or agency in respect of its monetary or fiscal affairs which in your
opinion has a material adverse effect on the financial markets in the United
States.
If on the Closing Date or on an Option Closing Date, as the
case may be, any one or more of the Underwriters shall fail or refuse to
purchase the Firm Shares or Additional Shares, as the case may be, which it or
they have agreed to purchase hereunder on such date and the aggregate number of
Firm Shares or Additional Shares, as the case may be, which such defaulting
Underwriter or Underwriters, as the case may be, agreed but failed or refused
to purchase is not more than one-tenth of the total number of Shares to be
purchased on such date by all Underwriters, each non-defaulting Underwriter
shall be obligated severally, in the proportion which the number of Firm Shares
set forth opposite its name in Schedule I bears to the total number of Firm
Shares which all the non-defaulting Underwriters, as the case may be,
26
<PAGE> 27
have agreed to purchase, or in such other proportion as you may specify, to
purchase the Firm Shares or Additional Shares, as the case may be, which such
defaulting Underwriter or Underwriters, as the case may be, agreed but failed
or refused to purchase on such date; provided that in no event shall the number
of Firm Shares or Additional Shares, as the case may be, which any Underwriter
has agreed to purchase pursuant to Section 2 hereof be increased pursuant to
this Section 9 by an amount in excess of one-ninth of such number of Firm
Shares or Additional Shares, as the case may be, without the written consent of
such Underwriter. If on the Closing Date or on an Option Closing Date, as the
case may be, any Underwriter or Underwriters shall fail or refuse to purchase
Firm Shares, or Additional Shares, as the case may be, and the aggregate number
of Firm Shares or Additional Shares, as the case may be, with respect to which
such default occurs is more than one-tenth of the aggregate number of Shares to
be purchased on such date by all Underwriters and arrangements satisfactory to
you and the Company for purchase of such Shares are not made within 48 hours
after such default, this Agreement will terminate without liability on the part
of any non-defaulting Underwriter and the Company. In any such case which does
not result in termination of this Agreement, either you or the Company shall
have the right to postpone the Closing Date or the applicable Option Closing
Date, as the case may be, but in no event for longer than seven days, in order
that the required changes, if any, in the Registration Statement and the
Prospectus or any other documents or arrangements may be effected. Any action
taken under this paragraph shall not relieve any defaulting Underwriter from
liability in respect of any default of any such Underwriter under this
Agreement.
10. Miscellaneous. Notices given pursuant to any
provision of this Agreement shall be addressed as follows: (a) if to the
Company, to US Unwired Inc., One Lakeshore Drive, Suite 1900, Lake Charles,
Louisiana 70629, and (b) if to any Underwriter or to you, to you c/o The
Robinson-Humphrey Company, Inc., 3333 Peachtree Road, N.E., Atlanta, Georgia
30326, Attention: Corporate Finance Department, or in any case to such other
address as the person to be notified may have requested in writing.
The respective indemnities, contribution agreements,
representations, warranties and other statements of the Company, its officers
and directors and of the several Underwriters set forth in or made pursuant to
this Agreement shall remain operative and in full force and effect, and will
survive delivery of and payment for the Shares, regardless of (i) any
investigation, or statement as to the results thereof, made by or on behalf of
any Underwriter or by or on behalf of the Company, the officers or directors of
the Company or any controlling person of the Company, (ii) acceptance of the
Shares and payment for them hereunder and (iii) termination of this Agreement.
If this Agreement shall be terminated by the Underwriters
because of any failure or refusal on the part of the Company to comply with the
terms or to fulfill any of the conditions of this Agreement, the Company agrees
to reimburse the several Underwriters for all out-of-pocket expenses (including
the fees and disbursements of counsel) reasonably and customarily incurred by
them in connection with the transactions contemplated by this Agreement.
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<PAGE> 28
Except as otherwise provided, this Agreement has been and is
made solely for the benefit of and shall be binding upon the Company, the
Underwriters, any controlling persons referred to herein and their respective
successors and assigns, all as and to the extent provided in this Agreement,
and no other person shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" shall not include a purchaser of
any of the Shares from any of the several Underwriters merely because of such
purchase.
This Agreement shall be governed and construed in accordance
with the laws of the State of New York.
This Agreement may be signed in various counterparts which
together shall constitute one and the same instrument.
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<PAGE> 29
Please confirm that the foregoing correctly sets forth the
agreement between the Company and the several Underwriters.
Very truly yours,
US UNWIRED INC.
By
----------------------------------
Name:
Title:
THE ROBINSON-HUMPHREY COMPANY, INC.
A.G. EDWARDS & SONS, INC.
Acting severally on behalf of
themselves and the several
Underwriters named in
Schedule I hereto
By THE ROBINSON-HUMPHREY COMPANY, INC.
By
------------------------
29
<PAGE> 30
SCHEDULE I
Number of Firm Shares
Underwriters to be Purchased
------------ ---------------------
The Robinson-Humphrey Company, Inc.
A.G. Edwards & Sons, Inc.
---------------------
30
<PAGE> 1
EXHIBIT 3.1
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
US UNWIRED INC.
* * *
ARTICLE I
NAME; DURATION
The name of the Corporation is:
US Unwired Inc.
Its duration is perpetual.
ARTICLE II
PURPOSE
The purpose of the Corporation is to engage in any lawful activity for
which corporations may be formed under the Louisiana Business Corporation Law
("LBCL").
ARTICLE III
CAPITAL STOCK: GENERAL PROVISIONS
A. Authorized Stock. The Corporation has the authority to issue
two hundred million shares of capital stock, of which one hundred million are
shares of Class A Common Stock, par value $.01 per share, sixty million are
shares of Class B Common Stock, par value $.01 per share, and forty million are
shares of preferred stock having no par value.
B. Common Stock. Except as otherwise expressly provided in these
Articles or as may be required by the LBCL notwithstanding the provisions of
these Articles, the Class A Common Stock and Class B Common Stock have
equivalent rights.
C. Preferred Stock. The preferred stock may be issued from time
to time in one or more series. The Board of Directors has authority to amend
the Articles from time to time to fix the preferences, limitations and relative
rights of any series of preferred stock, and to establish, and fix variations
in relative rights as between or among, series of preferred stock. The
<PAGE> 2
preferences, limitations, and relative rights so established may be amended
from time to time by the Board of Directors, subject only to any approval of
the holders of any series of preferred stock that may be required by these
Articles or by the LBCL notwithstanding the provisions of these Articles.
D. Voting Rights.
(1) Preferred stock shall have such voting rights as are
required by the LBCL and such as may be conferred by these Articles.
(2) Except as otherwise provided by these Articles or as
may be required by the LBCL notwithstanding the provisions of these Articles,
the Class A Common Stock and Class B Common Stock shall vote together as a
single class in the election of Directors and with respect to any other matter
for which shareholder action or approval is required by these Articles or by
the LBCL notwithstanding the provisions of these Articles, even if action or
approval of the Class A or Class B Common Stock voting on such matter as a
separate class is also required. Whether voting together as a single class or
voting by class, as the case may be, the Class A Common Stock shall have one
vote per share, and the Class B Common Stock shall have ten votes per share.
E. Issuance of Class B Shares. Shares of Class B Common
Stock shall initially be issued pursuant to the reclassification described in
Article IV(C). Additional shares of Class B Common Stock shall not be issued
unless (i) there are simultaneously issued that number of shares of Class A
Common Stock as shall be necessary to maintain, immediately following such
issuance, the same proportionate equity ownership by the two classes as existed
immediately prior to such issuance, or (ii) such shares are issued in
connection with a stock split, stock dividend or other reclassification that
complies with Article III(H) or the exception thereto, or (iii) holders of the
Class A Common Stock, voting as a separate class, and the Class B Common Stock,
voting as a separate class, shall have approved such issuance.
F. Redemption of Disqualified Holders.
(1) Except as may otherwise be expressly provided in
these Articles with respect to any series of preferred stock, the Corporation
may at any time redeem shares of its capital stock from any Disqualified Holder
or Holders to the extent that the ownership thereof (i) would constitute a
violation of Section 310 of the Communications Act of 1934, as such Act has
been and may be further amended, or any similar or successor federal law or
regulation (a "Violation"), or (ii) would prevent the Corporation or any
subsidiary from holding or materially delay it or any subsidiary in obtaining
any governmental license or franchise necessary to conduct any material portion
of the Corporation's Business, or materially increase the
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<PAGE> 3
Corporation's or any subsidiary's cost of obtaining or operating under any such
license or franchise (a "Prevention").
(2) The terms and conditions of any such redemption shall
be as follows:
(i) The number of shares to be redeemed shall be
(a) the minimum number required, in the opinion of the Board of Directors, to
remove the Violation or Prevention, as the case may be, plus (b) in the
discretion of the Board of Directors, any number of additional shares up to 15%
of the number calculated pursuant to clause (a).
(ii) The redemption price shall be the Fair Market
Value of the Redeemed Shares;
(iii) The redemption price shall be paid in cash,
Redemption Securities, or any combination thereof, as determined by the Board
of Directors;
(iv) The shares to be redeemed shall be selected
in such manner as shall be determined by the Board of Directors, which may
include selection first of the most recently purchased shares thereof,
selection by lot, or selection in any other manner determined by the Board of
Directors;
(v) at least 20 days' written notice of the
Redemption Date shall be given to the record holders of the shares selected to
be redeemed; provided, however, that only 10 days' written notice of the
Redemption Date shall be given to record holders if the cash or Redemption
Securities necessary to effect the redemption shall have been deposited in
trust for the benefit of such record holders and subject to immediate
withdrawal by them on and after the Redemption Date upon surrender of the stock
certificates for their shares to be redeemed; and
(vi) from and after the Redemption Date, any and
all rights of whatever nature (including without limitation any rights to vote
or participate in dividends declared on stock of the same class or series as
such shares) with respect to the shares selected for redemption shall cease and
terminate and such Disqualified Holders thenceforth shall be entitled only to
receive the cash or Redemption Securities payable upon redemption.
The Board of Directors may impose other terms and conditions not
inconsistent with the foregoing.
(3) For purposes of this Article III(F):
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<PAGE> 4
(i) "Business" means the wireless communications
business including (but without limitation) cellular, paging and personal
communications service. The foregoing description does not limit the
generality of Article II.
(ii) "Disqualified Holder" shall mean any holder
of capital stock of the Corporation whose holding of such stock, either
individually or when taken together with the holding of capital stock of the
Corporation by any other holder or holders would, in the opinion of the Board
of Directors, be a Violation or a Prevention.
(iii) "Fair Market Value" of a share of the
Corporation's stock of any class or series shall mean the average of the
closing prices for such a share on its principal trading market for each of the
ten trading days ending on the day preceding the day on which notice of
redemption shall be given; provided, however, that if shares of stock of such
class or series are not traded on any securities exchange registered under the
Securities Exchange Act of 1934 and are not quoted in the Nasdaq National
Market, "Fair Market Value" shall be the fair market value as of such day as
determined by the Board of Directors in good faith. Notwithstanding the
foregoing, shares of Class B Common Stock shall be deemed to have the same
"Fair Market Value" as an equivalent number of shares of Class A Common Stock.
(iv) "Redemption Date" shall mean the date fixed
by the Board of Directors for the redemption of shares pursuant to this Article
III(F).
(v) "Redemption Securities" shall mean any debt
or equity securities of the Corporation, any of its subsidiaries or affiliates
or any other corporation, or any combination thereof, having such terms and
conditions as shall be approved by the Board of Directors and which, together
with any cash to be paid as part of the redemption price, in the opinion of any
nationally recognized investment banking firm selected by the Board of
Directors (which may be a firm which provides other investment banking,
brokerage or other services to the Corporation), has a value, at the time
notice of redemption is given, at least equal to the redemption price required
to be paid.
(4) The Corporation may assign in whole or in part its
redemption rights under this Article III(F) to any third party, in whose hands
such rights shall become an option to purchase the shares on the same terms and
conditions as the Corporation's right of redemption.
(5) Notices of redemption shall be deemed to have been
given at the time deposited in the United States mail, certified or registered
with return receipt requested, properly addressed and postage prepaid. Time
periods that run from such notices shall commence on the first day after notice
is given.
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<PAGE> 5
G. Restoration. Shares of Class A or Class B Common Stock that
have converted into the other Class shall be restored to authorized but
unissued shares.
H. Reclassifications. No split, reverse split, stock dividend or
other reclassification of the Class A Common Stock shall be effected unless a
simultaneous and equivalent split, reverse split, stock dividend, or other
reclassification of the Class B Common Stock is effected, and vice versa,
except in either case for a stock split, reverse stock split and/or stock
dividend that is effected in accordance with Section 7 of the Agreement and
Plan of Reorganization dated as of September 19, 1996 (the "Plan"), among the
Corporation and other corporate parties, for the purpose of maintaining,
immediately following any issuance of additional shares of Class B Common Stock
pursuant to the adjustment provisions of Section 7 of the Plan, the same
proportionate equity ownership by the Class A Common Stock and Class B Common
Stock as existed immediately prior to such issuance of additional shares of
Class B Common Stock.
I. Dividends. No stock dividend on the Common Stock may be paid
in any shares other than shares of the class to which the stock dividend
pertains. Subject to the preceding sentence, any dividends declared, whether
in cash, shares or other property, shall be paid equally to the holders of
Class A Common Stock and Class B Common Stock, on a share-for-share basis, and
in the same property.
J. No Preemptive Rights. Shareholders shall not have any
preemptive
rights.
ARTICLE IV
CAPITAL STOCK:
CLASS B COMMON STOCK SPECIAL PROVISIONS
A. Qualified Holders. Class B Common Stock may be held only by
the following holders (each of which is a "Qualified Holder"):
(i) Persons and entities who receive Class B Common Stock
(a) in connection with the reclassification referred to in Article IV(C), or
(b) as a distribution from any such entity which received Class B Common Stock
in connection with the reclassification referred to in Article IV(C) (each such
person or entity is hereinafter referred to as a "Founder"),
(ii) Any natural person who is a descendent (including by
adoption) of a Founder;
(iii) Any trustee or other fiduciary, but only if and so
long as the sole beneficial owners of the shares are one or more Qualified
Holders;
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<PAGE> 6
(iv) Any corporation that is not a Founder, if the entire
capital stock thereof is owned by any one or more Qualified Holders; and
(v) Any partnership or limited liability company that is
not a Founder, whose sole partners or owners are one or more Qualified Holders.
(vi) Any person or entity which is designated a Qualified
Holder in accordance with the following paragraph.
If a Qualified Holder ceases to be such (as would, for
example, a corporation that is not a Founder some of whose stock is
transferred by a Qualified Holder to a non-Qualified Holder) then the shares of
Class B Common Stock owned by the former Qualified Holder shall be offered to
the remaining Qualified Holders and the Corporation according to the procedures
of Article IV(B), except that the "option period" described therein shall not
terminate until forty-five days after written notice of the cessation has been
given by the former Qualified Holder or any other Qualified Holder to the
Corporation and further except that the "market value per share" shall be the
lesser of that existing at the time of the cessation or that existing at the
time of such written notice. Any such shares not purchased by the remaining
Qualified Holders or the Corporation shall be automatically converted into
Class A Common Stock on a share-for-share basis and such converted shares shall
be subject to the limitations of Article IV(B)(7). Notwithstanding the
foregoing, such unpurchased shares shall not be converted into Class A Common
Stock if, within 30 days after the end of the Option Period, the holder is
designated a "Qualified Holder" by holders of a majority of the Class B Common
Stock then outstanding, in which event the unpurchased shares shall remain
Class B Common Stock and shall continue to be subject to Article IV. A
Qualified Holder who is a natural person does not cease to be a Qualified
Holder by reason of such person's death, but the transfer of such deceased
person's Class B Common Stock is subject to the restrictions of Article IV(B).
B. Transfer Restrictions.
(1) No sale, assignment, exchange, transfer, donation, or
other disposition of Class B Common Stock shall be made except (a) to a
Qualified Holder or Holders, (b) pursuant to any merger, consolidation, share
exchange, or disposition of all or substantially all of the Corporation's
assets that is approved in the manner provided in Article X(A), or (c) in
accordance with the offer and conversion procedures of this Article IV(B). Any
transfer in violation of the preceding sentence shall be void and the
Corporation shall be under no obligation to transfer such shares on its books,
pay dividends to the transferee, or otherwise regard the transferee thereof as
a shareholder.
(2) If any shareholder ("Offering Holder") desires to
sell, assign, exchange, transfer, donate, or otherwise dispose of shares of
Class B Common Stock otherwise than to a
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<PAGE> 7
Qualified Holder or Holders ("Offered Shares"), he shall first give written
notice thereof (the "Offer Notice") to the Corporation by overnight or hand
delivery and by registered mail, return receipt requested, in each case sent or
delivered to its registered office in Louisiana to the attention of its
Secretary. The Offer Notice must state the name and street address (which need
not be the record address) of the Offering Holder, the number of Offered
Shares, a description of the proposed sale, assignment, exchange, transfer,
donation or other disposition thereof, and the Offering Holder's calculation of
the "market value per share" (defined below) as of the day immediately
preceding the date on which the Offer Notice is given (the "Strike Price").
Upon receipt of such notice, the Corporation shall promptly send a copy to all
other Qualified Holders of Class B Common Stock. For the "Option Period"
specified below, such other Qualified Holders ("Optionees") shall have the
option to purchase all or any portion of the Offered Shares from the Offering
Holder at the "Option Price", which, for each Optionee, shall mean the market
value per share as of the day prior to the date on which such Optionee gives
the notice of acceptance referred to below. Each Optionee may exercise the
option by giving during the Option Period a notice of acceptance (the
"Acceptance Notice") that includes the name of the Optionee, the Optionee's
street address (which need not be the record address), the number of Offered
Shares which the Optionee desires to purchase (which number is subject to
allocation as described below), and the Optionee's calculation of the "Option
Price" that is applicable to such Optionee. The Strike Price calculated by the
Offering Holder and the Option Price calculated by the Optionee shall be
subject to verification by the other of them. The Acceptance Notice shall be
given to the Corporation in the same manner as the Offer Notice is required to
be given and shall be given in the same manner to the Offering Holder at such
Holder's address as set forth in the Offer Notice. If the total number of
shares subscribed for by the Optionees in their Acceptance Notices exceeds the
number of Offered Shares, the excess shall be allocated among the Optionees in
proportion to their respective subscriptions. If the total number of shares
subscribed for by the Optionees is less than the number of Offered Shares, then
for five days following the Option Period (the "Extended Option Period") the
Corporation (which for this purpose shall be considered an Optionee) shall have
the option to purchase all or any portion of the unpurchased shares at the
"Option Price" applicable to it. The Option Period begins on the date on which
the Offering Holder gives notice to the Corporation, and its duration depends
on the "Offer Magnitude", which means the product of (a) the Strike Price,
times (b) the number of shares being offered by the Offering Holder plus the
number of shares, if any, offered by the Offering Holder during the 3-month
period that immediately precedes the Option Period (which number shall be
appropriately adjusted to reflect any subsequent stock splits or stock
dividends), in each case including shares as to which the offer may have been
or may subsequently be withdrawn as aforesaid. The Option Period shall be (i)
10 days if the Offer Magnitude is less than $100,000; (ii) 20 days if the Offer
Magnitude is at least $100,000 but less than $250,000; and (iii) 30 days if the
Offer Magnitude is $250,000 or more.
(3) For purposes of this Article IV(B), the "market value
per share" shall mean the average of the closing prices of one share of Class A
Common Stock on its principal trading
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<PAGE> 8
market for each of the ten trading days ending on the day as of which market
value per share is to be determined or, if shares of Class A Common Stock are
not then traded in any public market, then "market value per share" shall be
the book value per share of Common Stock as of the month-end immediately
preceding the day as of which market value per share is to be determined, as
calculated and reported by the Corporation's independent accountants.
(4) The closing ("Option Closing") of each purchase
pursuant to an option in accordance with Article IV(B) shall occur at the
Corporation's registered office in Louisiana, at 1:00 p.m. on the third
business day following the last day of the Option Period (or, if there is an
Extended Option Period, the last day thereof), except that if the Corporation
is the purchaser the closing of its purchase shall be at such place and time on
the 10th day following its exercise of the option (or if such 10th day is not a
business day, then on the first business day thereafter). The purchase price
shall be paid at the Option Closing in cash, by wire transfer of funds or
official bank check, unless the Offering Holder and the Optionee shall
otherwise agree. Notwithstanding the foregoing, if the Strike Price exceeds by
more than 5% the Option Price of an Optionee, the Offering Holder may by a
notice of withdrawal (the "Withdrawal Notice") withdraw from its offer the
shares allocated or to be allocated to such Optionee unless such Optionee (or
any other Optionee) agrees by the time of the Option Closing that the Option
Price of such Optionee shall be increased to the Strike Price. The Withdrawal
Notice must be given by the earlier of (i) the third business day following the
date on which the Acceptance Notice is given or (ii) the time of the Option
Closing. Shares so withdrawn shall be considered Offered Shares until
withdrawn, but no reallocation of the Offered Shares among Optionees shall
occur by reason of such withdrawal except to the extent that other Optionees
agree to purchase at the Strike Price the shares otherwise withdrawn.
(5) Any of the Offered Shares not purchased by the
Optionees or by the Corporation (other than any withdrawn by a Withdrawal
Notice or not purchased due to any title defect or fault of or attributable to
the holder) may be converted by the holder to Class A Common Stock, and such
holder may for a period of 90 days (180 days if the Offer Notice states that
the shares are to be sold in the public market and they are indeed so sold)
following the expiration of the Extended Option Period sell, assign, exchange,
transfer, donate or otherwise dispose of such converted shares (but not the
shares of Class B Common Stock) in the public market (subject to Article
IV(B)(7)) or otherwise, but if disposed of otherwise than in the public market
then the price may not exceed the Strike Price except that if a proposed
transaction is described in the Offer Notice and involves a consideration
(which may be based on a formula involving market prices) that is described
with specificity therein, then such transaction may be consummated for such
consideration even if it exceeds the Strike Price. Any of such converted
shares that have not been sold, assigned, exchanged, transferred, donated or
otherwise disposed of as permitted by Article IV(B) shall, at the expiration of
the 90-day (or 180-day, as the case may be) period referred to above,
automatically reconvert, on a share-for-share basis, into shares of Class B
Common Stock.
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<PAGE> 9
(6) This Article IV(B) shall not apply to any bona fide
pledge or hypothecation of shares to secure an obligation of the holder. If
such a holder subsequently defaults on such obligation, the creditor, before
enforcing any of its rights with respect to such shares, shall follow the same
procedure as the holder would have been required to follow to sell the shares
and shall be permitted to sell the shares only as and to the same extent the
shareholder would be permitted to do so under this Article IV(B).
(7) Shares of Class A Common Stock that are issued upon
conversion of Class B Common Stock by a holder thereof pursuant to this Article
IV may not be sold by such holder in the public market if such sale would cause
the number of such shares that have been sold in the public market by such
holder and such holder's affiliates (and any other holder(s) acting in concert
with them) during the three-month period ending on the date of such sale to
exceed one percent of the total number of shares of Class A Common Stock
outstanding on such date, unless holders of at least a majority of the Class B
Common Stock have consented to such sale or such sale is pursuant to a public
offering on a firm underwriting basis. In making this calculation, appropriate
adjustments shall be made for all stock splits and stock dividends.
C. Reclassification. The shares (including fractional shares) of
the Corporation's common stock, par value $50.00 per share ("Old Common
Stock"), outstanding on the effective date of these Amended and Restated
Articles of Incorporation are reclassified on such effective date into shares
of Class B Common Stock at the rate of 16,643.034544 (sixteen thousand six
hundred forty-three and 34,544 one-hundred-thousandths) shares of Class B
Common Stock for each full share of Old Common Stock and a proportionate number
of shares of Class B Common Stock for each fractional share of Old Common
Stock. Following such reclassification the Corporation shall not issue
fractional shares and any fraction of a share of Class B Common Stock to which
a holder of Old Common Stock would otherwise have been entitled shall be
cancelled without payment to such holder.
D. Certificate Legend. Each certificate representing shares of
Common Stock that are subject to Article IV shall bear a legend making
reference to Article IV.
ARTICLE V
DIRECTORS
A. Number. The number of Directors constituting the full Board
of Directors shall be the greater of (a) three; (b) the number set forth in the
By-Laws of the Corporation from time to time (but no decrease in such number
shall shorten the term of an incumbent director); and (c) the number that is
two times the sum of (i) one, plus (ii) the number of Directors which preferred
stock is entitled to elect ("Preferred Directors").
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<PAGE> 10
B. Quorum. A quorum of Directors shall consist of a majority of
the number of Directors constituting the full Board of Directors.
C. Proxies. Any Director who is absent from a meeting of the
board or any committee thereof may be represented by any other Director, who
may cast the vote of the absent director according to the written instructions,
general or special, of the absent Director.
D. Classification. The Board of Directors shall be divided, with
respect to the time during which they shall hold office, into three classes as
nearly equal in number as possible, with the initial term of office of the
Class I directors expiring at the annual meeting of shareholders to be held in
1998, of the Class II directors expiring at the next succeeding annual meeting
of shareholders, and of the Class III directors expiring at the second
succeeding annual meeting, with all such directors to hold office until their
successors are elected and qualified. Any increase or decrease in the number
of directors shall be apportioned by the Board of Directors so that all classes
of directors shall be as nearly equal as possible. At each annual meeting of
shareholders, directors chosen to succeed those whose terms then expire shall
be elected to hold office for a term expiring at the annual meeting of
shareholders held in the third year following the year of their election and
until their successors are duly elected and qualified.
E. Vacancies. Any vacancy on the Board of Directors (including
any vacancy resulting from an increase in the authorized number of Directors,
from the removal of a Director or from a failure of the shareholders to elect
the full number of authorized Directors) may be filled as follows: if the
vacant position is that of a Preferred Director, the vacancy may be filled as
provided elsewhere in these Articles or, if not so provided, then by vote of a
majority of the remaining Preferred Directors even though not constituting a
quorum of the full Board of Directors. If the vacant position is other than
that of a Preferred Director, the vacancy may be filled by vote of a majority
of the remaining Directors even if not constituting a quorum of the full Board
of Directors, or, if such remaining Directors have not theretofore acted, by
the holders of Common Stock.
F. Removal. A Director may be removed at any time, with or
without cause, but only by the vote of a majority of the shares that would be
entitled to elect the successor to the removed director.
ARTICLE VI
LIMITATION OF LIABILITY; INDEMNIFICATION
A. Limitation of Liability. No director or officer of the
Corporation shall be liable to the Corporation or to its shareholders for
monetary damages for breach of his or her fiduciary duty as a director or
officer, provided that the foregoing provision shall not eliminate or limit the
liability of a director of officer for (1) any breach of the director's or
officer's duty of loyalty to
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<PAGE> 11
the Corporation or its shareholders; (2) acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law; (3)
liability for unlawful distributions of the Corporation's assets to, or
redemption or repurchase of the Corporation's shares from, shareholders of the
Corporation, under and to the extent provided in LBCL Section 92(D); or (4) any
transaction from which the director or officer derived an improper personal
benefit.
B. Authorization of Further Actions. The Board of Directors may
(1) cause the Corporation to enter into contracts with its directors and
officers providing for the limitation of liability set forth in this Article to
the full extent permitted by law, (2) adopt By-Laws or resolutions, or cause
the Corporation to enter into contracts, providing for indemnification of
directors and officers and other persons (including, without limitation,
directors and officers of the Corporation's direct and indirect subsidiaries)
to the full extent permitted by law, and (3) cause the Corporation to exercise
the powers set forth in LBCL Section 83(F), notwithstanding that some or all of
the members of the Board of Directors acting with respect to the foregoing may
be parties to such contracts or beneficiaries of such By-Laws or resolutions or
the exercise of such powers.
C. Subsidiaries. The Board of Directors may cause the
Corporation to approve for its direct and indirect subsidiaries limitation of
liability and indemnification provisions comparable to the foregoing,
notwithstanding that some or all of the directors of the Corporation are also
directors or officers of such subsidiaries.
D. Amendment of Article VI. Any amendment or repeal of this
Article shall not adversely affect any elimination or limitation of liability
or any right to indemnification under this Article with respect to any action
or inaction occurring prior to the time of such amendment or repeal.
ARTICLE VII
MEETINGS OF SHAREHOLDERS
A. Special Meetings. Special meetings of shareholders, for any
purpose or purposes, may be called in any manner set forth in the By-Laws. In
addition, at any time, upon the written request of any shareholder or group of
shareholders holding in the aggregate at least (i) 60% of the total voting
power of any series or class, the Secretary of the Corporation shall call a
special meeting of shareholders of such series or class, or (ii) 60% of the
total voting power of the Corporation, the Secretary of the Corporation shall
call a special meeting of all shareholders of the Corporation. Any such
special meeting shall be held at the registered office of the Corporation at
such time as the Secretary may fix, not less than 15 nor more than 60 days
after the receipt of said request, and if the Secretary shall neglect or refuse
to fix such time or to give notice of the meeting, the shareholder or
shareholders making the request may do so. Such requests must state the
specific purpose or purposes of the proposed special meeting, and the
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business to be conducted thereat shall be limited to such purpose or purposes.
Except as set forth in this Article VII, shareholders of the Corporation shall
not have the right to call or have called special meetings of the shareholders.
B. Written Consents. Whenever by any provision of law, these
Articles, or the Corporation's By-Laws, the affirmative vote of holders of
Class A Common Stock and Class B Common Stock, voting together as a single
class, is required to authorize or constitute corporate action, the consent in
writing to such corporate action signed by holders holding that proportion of
the total votes of the Class A Common Stock and Class B Common Stock on the
question which is required by these Articles or by law, whichever requirement
is higher, shall be sufficient, without necessity for a meeting of holders of
the Class A Common Stock and Class B Common Stock. Whenever by any provision of
law, these Articles, or the Corporation's By-Laws, the affirmative vote of
holders of Class B Common Stock, voting as a separate class, is required to
authorize or constitute corporate action, the consent in writing to such
corporate action signed by holders holding that proportion of the total votes
of the Class B Common Stock on the question which is required by these Articles
or by law, whichever requirement is higher, shall be sufficient, without
necessity for a meeting of holders of the Class B Common Stock.
C. Quorum. A majority of the total votes of any class of Common
Stock or any series of preferred stock shall constitute a quorum with respect
to any matter requiring a vote of such class or series. A majority of the
total votes of any classes and/or series entitled to vote together as if a
single class shall constitute a quorum with respect to any matter requiring a
vote of any such classes and/or series voting as if a single class.
ARTICLE VIII
REVERSION
Cash, property or share dividends, shares issuable to shareholders in
connection with a reclassification of stock, and the redemption price of
redeemed shares, that are not claimed by the shareholders entitled thereto
within one year after the dividend or redemption price became payable or the
shares became issuable, despite reasonable efforts by the Corporation to pay
the dividend or redemption price or deliver the certificates for the shares to
such shareholders within such time, shall, at the expiration of such time,
revert in full ownership to the Corporation, and the Corporation's obligation
to pay such dividend or redemption price or issue such shares, as the case may
be, shall thereupon cease; provided, however, that the Board of Directors may,
at any time, for any reason satisfactory to it, but need not, authorize (1)
payment of the amount of any cash or property dividend or redemption price or
(2) issuance of any shares, ownership of which has reverted to the Corporation
pursuant to this Article, to the person or entity who or which would be
entitled thereto had such reversion not occurred.
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ARTICLE IX
BY-LAWS
A. Adoption, Amendment and Repeal. By-Laws of the Corporation
may be adopted, amended or repealed by the Board of Directors, subject to any
power granted by the LBCL to shareholders to change or repeal any By-Laws so
adopted or amended, which power (if granted by the LBCL) may only be exercised
at any annual or special meeting of shareholders, the notice of which expressly
states that the proposed change or repeal is to be considered at the meeting.
B. New Matters. Any purported amendment to the By-Laws which
would add thereto a matter not covered in the By-Laws prior to such purported
amendment shall be deemed to constitute the adoption of a By-Law provision and
not an amendment to the By-Laws.
ARTICLE X
VOTE ON CERTAIN TRANSACTIONS AND AMENDMENTS TO
ARTICLES OF INCORPORATION
A. Vote Required for Shareholder Action. If the Board of
Directors has in advance approved and/or recommended any proposal presented to
the shareholders, including but not limited to a proposal to approve a merger,
consolidation, share exchange, disposition of all or substantially all of the
Corporation's assets, dissolution or any amendment to these Articles of
Incorporation, by the affirmative vote of three-fourths of the number of
Directors constituting the full Board of Directors, then, in addition to any
other vote required by these Articles or by the LBCL notwithstanding the
provisions of these Articles, the affirmative vote of holders of at least a
majority of the voting power present, with all classes and series voting
together as if a single class, shall be required to approve such proposal.
Otherwise, the affirmative vote of holders of at least 66 2/3% of the total
voting power, with all classes and series voting together as if a single class,
shall be required to constitute shareholder approval of such proposal, in
addition to any other vote required by these Articles or by the LBCL
notwithstanding the provisions of these Articles. If a special vote of any
class or series of shares is required under Section 31(C) of the LBCL (or any
successor provisions) to amend the Articles of Incorporation, the requisite
vote shall be the affirmative vote of holders of at least a majority of the
voting power present of such class or series.
B. Business Combinations and Control Share Acquisitions. The
provisions of LBCL Sections 132 through 134 (as the same may hereafter be
amended) shall not apply to the Corporation . [NOTE: SPECIAL VOTE REQUIRED TO
ADOPT THIS PROVISION -- SEE 134E(1)(B).] The provisions of LBCL Sections 135
through 140.2 (as the same may hereafter be amended) shall not apply to control
share acquisitions of shares of the Corporation.
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EXHIBIT 3.2
ADOPTED
January 16, 1997
BY-LAWS
OF
US UNWIRED INC.
* * *
SECTION 1
OFFICES
1.1 PRINCIPAL OFFICE. The principal office of the Corporation shall
be located at CM Tower, Suite 1900, One Lakeshore Drive, Lake Charles,
Louisiana 70629.
1.2 ADDITIONAL OFFICES. The Corporation may have such offices at
such other places as the Board of Directors may from time to time determine or
the business of the Corporation may require.
SECTION 2
SHAREHOLDERS' MEETINGS
2.1 PLACE OF MEETINGS. Unless otherwise required by law or these By-
Laws, all meetings of the shareholders shall be held at the principal office of
the Corporation or at such other place, within or without the State of
Louisiana, as may be designated by the Board of Directors.
2.2 ANNUAL MEETINGS; NOTICE THEREOF. An annual meeting of the
shareholders shall be held each year on the date and at the time as the Board
of Directors shall designate, for the purpose of electing directors and for the
transaction of such other business as may be properly brought before the
meeting. If no annual shareholders' meeting is held for a period of eighteen
months, any shareholder may call such meeting to be held at the registered
office of the Corporation as shown on the records of the Secretary of State of
the State of Louisiana.
2.3 SPECIAL MEETINGS. Special meetings of shareholders, for any
purpose or purposes, may be called in any manner set forth in the By-Laws. In
addition, at any time, upon the written request of any shareholder or group of
shareholders holding in the aggregate at least (i) 60% of the total voting
power of any series or class, the Secretary of the Corporation shall call a
special
<PAGE> 2
meeting of shareholders of such series or class, or (ii) 60% of the total
voting power of the Corporation, the Secretary of the Corporation shall call a
special meeting of all shareholders of the Corporation. Any such special
meeting shall be held at the registered office of the Corporation at such time
as the Secretary may fix, not less than 15 nor more than 60 days after the
receipt of said request, and if the Secretary shall neglect or refuse to fix
such time or to give notice of the meeting, the shareholder or shareholders
making the request may do so. Such requests must state the specific purpose or
purposes of the proposed special meeting, and the business to be conducted
thereat shall be limited to such purpose or purposes. Except as set forth in
this Article VII, shareholders of the Corporation shall not have the right to
call or have called special meetings of the shareholders.
2.4 NOTICE OF MEETINGS. Except as otherwise provided by law, the
authorized person or persons calling a shareholders' meeting shall cause
written notice of the time, place and purpose of the meeting to be given to all
shareholders entitled to vote at such meeting, at least 10 days and not more
than 60 days prior to the day fixed for the meeting. Notice of the annual
meeting need not state the purpose or purposes thereof, unless action is to be
taken at the meeting as to which notice is required by law or the By-Laws.
Notice of a special meeting shall state the purpose or purposes thereof, and
the business conducted at any special meeting shall be limited to the purpose
or purposes stated in the notice.
2.5 LIST OF SHAREHOLDERS. At every meeting of shareholders, a list
of shareholders entitled to vote, arranged alphabetically and certified by the
Secretary or by the agent of the Corporation having charge of transfers of
shares, showing the number and class of shares held by each such shareholder on
the record date for the meeting and confirming the number of votes per share as
to which each such shareholder is entitled, shall be produced on the request of
any shareholder.
2.6 QUORUM. A majority of the total votes of any class of Common
Stock or any series of preferred stock shall constitute a quorum with respect
to any matter requiring a vote of such class or series. A majority of the
total votes of any classes and/or series entitled to vote together as if a
single class shall constitute a quorum with respect to any matter requiring a
vote of any such classes and/or series voting as if a single class.
2.7 VOTING. Except as otherwise provided by the Articles of
Incorporation or as may be required by the Louisiana Business Corporation Law
("LBCL") notwithstanding the provisions of the Articles, the Class A Common
Stock and Class B Common Stock shall vote together as a single class in the
election of Directors and with respect to any other matter for which
shareholder action or approval is required by the Articles or by the LBCL
notwithstanding the provisions of the Articles, even if action or approval of
the Class A or Class B Common Stock voting on such matter as a separate class
is also required. Whether voting together as a single class or voting by
class, as the case may be, the Class A Common Stock shall have one vote per
share, and the Class B Common Stock shall have ten votes per share.
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<PAGE> 3
2.8 PROXIES. At any meeting of the shareholders, every shareholder
having the right to vote shall be entitled to vote in person, or by proxy
appointed by an instrument in writing executed by such shareholder and bearing
a date not more than eleven months prior to said meeting, unless said
instrument provides for a longer period, but in no case will an outstanding
proxy be valid for longer than three years from the date of its execution,
provided, however, that in no event may a proxy be voted at a meeting called
pursuant to La. R.S. 12:138 unless it is executed and dated by the shareholder
within 30 days of the date of such meeting. The person appointed as a proxy
need not be a shareholder of the Corporation.
2.9 ADJOURNMENTS. Adjournments of any annual or special meeting of
shareholders may be taken without new notice being given unless a new record
date is fixed for the adjourned meeting, but any meeting at which directors are
to be elected shall be adjourned only from day to day until such directors
shall have been elected.
2.10 WITHDRAWAL. If a quorum is present or represented at a duly
organized shareholders' meeting, such meeting may continue to do business until
adjournment, notwithstanding the withdrawal of enough shareholders to leave
less than a quorum as fixed in Section 2.6 of these By-Laws, or the refusal of
any shareholders to vote.
2.11 LACK OF QUORUM. If a meeting cannot be organized because a
quorum has not attended, those present may adjourn the meeting to such time and
place as they may determine, subject, however, to the provisions of Section 2.9
hereof. In the case of any meeting called for the election of directors, those
who attend the second of such adjourned meetings, although less than a quorum
as fixed in Section 2.6 hereof, shall nevertheless be deemed to constitute a
quorum for the purpose of electing directors.
SECTION 3
DIRECTORS
3.1 NUMBER. All of the corporate powers shall be vested in, and the
business and affairs of the Corporation shall be managed by a Board of
Directors. Except as otherwise fixed by or pursuant to Article V of the
Articles of Incorporation (as it may be duly amended from time to time)
relating to the rights of the holders of any class or series of stock having a
preference over the Common Stock as to dividends or upon liquidation to elect
additional directors by class vote, the Board of Directors shall consist of
SEVEN natural persons, provided that, if after proxy materials for any meeting
of shareholders at which directors are to be elected are mailed to shareholders
any person or person named therein to be nominated at the direction of the
Board of Directors becomes unable or unwilling to serve, the foregoing number
of authorized directors shall be automatically reduced by a number equal to the
number of such persons unless the Board of Directors selects an additional
nominee or nominees to replace such
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<PAGE> 4
persons. No director need be a shareholder. The Secretary shall have the
power to certify at any time as to the number of directors authorized and as to
the class to which each director has been elected or assigned.
3.2 POWERS. The Board may exercise all such powers of the
Corporation and do all such lawful acts and things which are not by law, the
Articles of Incorporation or these By-Laws directed or required to be done by
the shareholders.
3.3 CLASSES. The Board of Directors shall be divided, with respect
to the time during which they shall hold office, into three classes as nearly
equal in number as possible, with the initial term of office of Class I
directors expiring at the annual meeting of shareholders to be held in 1997, of
Class II directors expiring at the next succeeding annual meeting of
shareholders and of Class III directors expiring at the second succeeding
annual meeting of shareholders, with all such directors to hold office until
their successors are elected and qualified. Any increase or decrease in the
number of directors shall be apportioned by the Board of Directors so that all
classes of directors shall be as nearly equal in number as possible. At each
annual meeting of shareholders, directors chosen to succeed those whose terms
then expire shall be elected to hold office for a term expiring at the annual
meeting of shareholders held in the third year following the year of their
election and until successors are duly elected and qualified.
3.4 GENERAL ELECTION. At each annual meeting of shareholders,
directors shall be elected to succeed those directors whose terms then expire.
No decrease in the number of directors constituting the Board of Directors
shall shorten the term of any incumbent director.
3.5 VACANCIES. Except as otherwise provided in the Articles of
Incorporation or these By-Laws, (a) the office of a director shall become
vacant if he dies, resigns or is duly removed from office and (b) the Board of
Directors may declare vacant the office of a director if he (i) is interdicted
or adjudicated an incompetent, (ii) is adjudicated a bankrupt, (iii) in the
sole opinion of the Board of Directors becomes incapacitated by illness or
other infirmity so that he is unable to perform his duties for a period of six
months or longer, or (iv) ceases at any time to have the qualifications
required by law, the Articles of Incorporation or these By-Laws.
3.6 FILLING VACANCIES. Except as otherwise provided in the Articles
of Incorporation or Section 3.8 of these By-Laws, any vacancy on the Board
(including any vacancy resulting from an increase in the authorized number of
directors or from failure of the shareholders to elect the full number of
authorized directors) may, notwithstanding any resulting absence of a quorum of
directors, be filled by a majority vote of the Board of Directors remaining in
office, provided that the shareholders shall have the right, at any special
meeting called for such purpose prior to any such action by the Board, to fill
the vacancy. A director elected pursuant to this section shall serve until the
next shareholders' meeting held for the election of directors of the class to
which he shall have been appointed and until his successor is elected and
qualified.
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<PAGE> 5
3.7 NOTICE OF SHAREHOLDER NOMINEES. Except as otherwise provided in
Section 3.8 of these By-Laws, only persons who are nominated in accordance with
the procedures set forth in this section shall be eligible as directors.
Nominations of persons for election to the Board of Directors of the
Corporation may be made at a meeting of shareholders by or at the direction of
the Board of Directors or by any shareholder of record of the Corporation
entitled to vote for the election of directors at the meeting who complies with
the notice procedures set forth in this section. Such nominations, other than
those made by or at the direction of the Board of Directors, shall be made
pursuant to timely notice in writing to the Secretary of the Corporation. To
be timely, a shareholder's notice must be delivered or mailed and received at
the principal office of the Corporation not less than 45 days nor more than 90
days prior to the meeting, provided, however, that in the event that less than
55 days notice or prior public disclosure of the date of the meeting is given
or made to shareholders, notice by the shareholder to be timely must be
received no later than the close of business on the tenth day following the day
on which such notice of the date of the meeting was mailed or such public
disclosure was made. Such shareholder's notice shall set forth or include the
following:
a. as to each person whom the shareholder proposes to
nominate for election or re-election as a director (i) the name, age,
business address and residential address of such person, (ii) the
principal occupation or employment of such person, (iii) the class and
number of shares of capital stock of the Corporation of which such
person is the beneficial owner (as defined in Rule 13d-3 promulgated
under the Securities Exchange Act of 1934), (iv) such person's written
consent to being named in the proxy statement as a nominee and to serve
as a director if elected and (v) any other information relating to such
person that would be required to be disclosed in solicitations of
proxies for election of directors, or would be otherwise required, in
each case pursuant to Regulation 14A under the Securities Exchange Act
of 1934; and
b. as to the shareholder of record giving the notice, (i) the
name and address of such shareholder and (b) the class and number of
shares of capital stock of the Corporation of which such shareholder is
the beneficial owner (as defined in Rule 13d-3 promulgated under the
Securities Exchange Act of 1934). If requested in writing by the
Secretary of the Corporation at least 15 days in advance of the meeting,
such shareholder shall disclose to the Secretary, within 10 days of such
request, whether such person is the sole beneficial owner of the shares
held of record by him, and, if not, the name and address of each other
person known by the shareholder of record to claim or have a beneficial
interest in such shares.
At the request of the Board of Directors, any person nominated by or at the
direction of the Board of Directors for election as a director shall furnish to
the Secretary of the Corporation that information required to be set forth in a
shareholder's notice of nomination which pertains to the nominee. If a
shareholder seeks to nominate one or more persons as directors, the Secretary
shall appoint two inspectors, who shall not be affiliated with the Corporation,
to determine whether the shareholder has complied with this section. If the
inspectors shall determine that
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the shareholder has not complied with this section, the defective nomination
shall be disregarded and the inspectors shall direct the Chairman of the
meeting to declare at the meeting that such nomination was not made in
accordance with the procedures prescribed by the Articles of Incorporation and
these By-Laws.
3.8 DIRECTORS ELECTED BY PREFERRED SHAREHOLDERS. Notwithstanding
anything in these By-Laws to the contrary, whenever the holders of any one or
more classes or series of stock having a preference over the Common Stock as to
dividends or upon liquidation shall have the right, voting separately as a
class, to elect one or more directors of the Corporation, the provisions of the
Articles of Incorporation (as they may be duly amended from time to time fixing
the rights and preferences of such preferred stock) shall govern with respect
to the nomination, election term, removal, vacancies or other related matters
with respect to such directors.
3.9 COMPENSATION OF DIRECTORS. Directors shall receive such
compensation for their services, in their capacity as directors, as may be
fixed by resolution of the Board of Directors, provided, however, that nothing
herein contained shall be construed to preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor.
SECTION 4
MEETINGS OF THE BOARD
4.1 PLACE OF MEETINGS. The meetings of the Board of Directors may be
held at such place within or without the State of Louisiana as a majority of
the directors may from time to time appoint.
4.2 INITIAL MEETINGS. The first meeting of each newly elected Board
shall be held immediately following the annual shareholders' meeting at which
the Board or any class thereof, is elected and at the same place as the annual
meeting, and no notice of such first meeting shall be necessary for the newly
elected directors in order legally to constitute the meeting.
4.3 REGULAR MEETINGS; NOTICE. Regular meetings of the Board may be
held at such times as the Board may from time to time determine. Notice of
regular meetings of the Board of Directors shall be required, but no special
form of notice or time of notice shall be necessary.
4.4 SPECIAL MEETINGS; NOTICE. Special meetings of the Board may be
called by the Chairman of the Board or the President on reasonable notice given
to each director, either personally or by telephone, mail, telex, telecopy or
any other comparable form of facsimile communication. Special meetings shall
be called by the Secretary in like manner and on like notice on the written
request of a majority of the directors and if the officer fails or refuses, or
is unable within 24 hours to call a meeting when requested, then the directors
making the request
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may call the meeting on two days' written notice given to each director. The
notice of a special meeting of directors need not state its purpose or
purposes. But if the notice states a purpose or purposes and does not state a
further purpose to consider such other business as may properly come before the
meeting, the business to be conducted at the special meeting shall be limited
to the purpose or purposes stated in the notice.
4.5 WAIVER OF NOTICE. Directors present at any regular or special
meeting shall be deemed to have received, or to have waived, due notice
thereof, provided that a director who participates in a meeting by telephone
(as permitted by Section 4.9 hereof) shall not be deemed to have received or
waived due notice if, at the beginning of the meeting, he objects to the
transaction of any business because the meeting is not lawfully called.
4.6 QUORUM. A majority of the Board shall be necessary to constitute
a quorum for the transaction of business, and except as otherwise provided by
law, the Articles of Incorporation or these By-Laws, the acts of a majority of
the directors present at a duly called meeting at which a quorum is present
shall be the acts of the Board. If a quorum is not present at any meeting of
the Board of Directors, the directors present may adjourn the meeting from time
to time without notice other than announcement at the meeting until a quorum is
present.
4.7 WITHDRAWAL. If a quorum was present when the meeting convened,
the directors present may continue to do business, taking action by vote of a
majority of a quorum as fixed in Section 4.6 hereof, until adjournment,
notwithstanding the withdrawal of enough directors to leave less than a quorum
as fixed in Section 4.6 hereof or the refusal of any director present to vote.
4.8 ACTION BY CONSENT. Any action that may be taken at a meeting of
the Board, or any committee thereof, may be taken by a consent in writing
signed by all of the directors or by all members of the committee, as the case
may be, and filed with the records of proceedings of the Board or committee.
4.9 MEETINGS BY TELEPHONE OR SIMILAR COMMUNICATIONS. Members of the
Board may participate at and be present at any meeting of the Board or any
committee thereof by means of conference telephone or similar communications
equipment if all persons participating in such meeting can hear and communicate
with each other.
SECTION 5
COMMITTEES OF THE BOARD
5.1 GENERAL. The Board may designate one or more committees, each
committee to consist of two or more of the directors of the Corporation (and
one or more directors may be named as alternate members to replace any absent
or disqualified regular members), which, to
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the extent provided by resolution of the Board or these By-Laws, shall have and
may exercise the powers of the Board in the management of the business and
affairs of the Corporation, and may have power to authorize the seal of the
Corporation to be affixed to documents, but no such committee shall have power
or authority to amend the Articles of Incorporation, adopt an agreement of
merger, consolidation or share exchange, recommend to the shareholders the
sale, lease or exchange of all or substantially all of the Corporation's
assets, recommend to the shareholders a dissolution of the Corporation or a
revocation of dissolution, remove or indemnify directors, or amend these By-
Laws; and unless the resolution expressly so provides, no such committee shall
have the power of authority to declare a dividend or authorize the issuance of
stock. Such committee or committees shall have such name or names as may be
stated in these By-Laws, or as may be determined, from time to time by the
Board. Any vacancy occurring in any such committee shall be filled by the
Board, but the President may designate another director to serve on the
committee pending action by the Board. Each such committee shall hold office
during the term of the Board.
5.2 COMPENSATION COMMITTEE. The Board shall establish and maintain a
Compensation Committee consisting of three or more directors, none of whom
shall be an employee of the Company or any of its subsidiaries, and each of
whom shall meet any further qualifications designated by the Board. The
Compensation Committee shall perform such services as may be designated by the
Board.
5.3 AUDIT COMMITTEE. The Board shall establish an Audit Committee
consisting of at least three directors, a majority of whom are not officers or
employees of the Corporation or any of its subsidiaries. The Audit Committee
shall (i) serve as a focal point for communications between the Corporation's
directors, management, independent accountants and internal auditing personnel,
as their duties relate to financial accounting, reporting and controls, (ii)
assist the Board of Directors in fulfilling its fiduciary responsibilities as
to accounting policies and reporting practices of the Corporation and all
subsidiaries and the sufficiency of auditing practices with respect thereto, in
part, by reviewing the scope of audit coverage, including consideration of the
Corporation's accounting practices and procedures and system of internal
accounting controls and reporting to the Board with respect thereto, (iii)
operate as the Board's principal agent in ensuring the independence of the
Corporation's independent accountants, the integrity of management and the
adequacy of disclosure to shareholders, and (iv) perform such other services as
may be designated by the Board.
SECTION 6
REMOVAL OF BOARD MEMBER
The shareholders, by vote of a majority of the shares that would be
entitled to elect the successor to the removed director, may remove from office
any one or more of the directors, notwithstanding that his or their terms of
office may not have expired, and may at such meeting elect one or more
successors, as the case may be, for the unexpired term.
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SECTION 7
NOTICES
7.1 FORM OF DELIVERY. Whenever under the provisions of law, the
Articles of Incorporation or these By-Laws notice is required to be given to
any shareholder or director, it shall not be construed to mean personal notice
unless otherwise specifically provided in the Articles of Incorporation or
these By-Laws, but such notice may be given by mail, addressed to such
shareholder or director at his address as it appears on the records of the
Corporation, with postage thereon prepaid, or in such other manner as may be
specified in these By-Laws. Notices given by mail shall be deemed to have been
given at the time they are deposited in the United States mail, and all other
notices shall be deemed to have been given upon receipt.
7.2 WAIVER. Whenever any notice is required to be given by law, the
Articles of Incorporation or these By-Laws, a waiver thereof in writing signed
by the person or persons entitled to said notice, whether before or after the
time stated therein, shall be deemed equivalent thereto. In addition, notice
shall be deemed to have been given to, or waived by, any shareholder or
director who attends a meeting of shareholders or directors in person, or is
represented at such meeting by proxy, without protesting at the commencement of
the meeting the transaction of any business because the meeting is not lawfully
called or convened.
SECTION 8
OFFICERS
8.1 DESIGNATIONS. The officers of the Corporation shall be elected
by the directors and shall be the Chairman of the Board, President, Secretary
and Treasurer. The Board of Directors may appoint a Chief Executive Officer,
one or more Vice Presidents and such other officers as it shall deem necessary,
who shall hold their offices for such terms and shall exercise such powers and
perform such duties as shall be determined from time to time by the Board.
More than one office maybe may be held by one person, provided that no person
holding more than one office may sign, in more than one capacity, any
certificate or other instrument required by law to be signed by two officers.
8.2 TERM OF OFFICE. The officers of the Corporation shall hold
office at the pleasure of the Board of Directors. Except as otherwise provided
in the resolution of the Board of Directors electing any officer, each officer
shall hold office until the first meeting of the Board of Directors after the
annual meeting of shareholders next succeeding his or her election and until
his or her successor is elected and qualified or until his or her earlier
resignation or removal. Any officer may resign at any time upon written notice
to the Board, Chairman of the Board, President or Secretary of the Corporation.
Such resignation shall take effect at the time specified therein and acceptance
of such resignation shall not be necessary to make it effective.
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<PAGE> 10
The Board may remove any officer with or without cause at any time. Any such
removal shall be without prejudice to the contractual rights of such officers,
if any, with the Corporation, but the election of an officer shall not in and
of itself create contractual rights. Any vacancy occurring in any office of
the Corporation by death, resignation, removal or otherwise may be filled for
the unexpired portion of the term by the Board at any regular or special
meeting.
8.3 THE CHAIRMAN OF THE BOARD. The Chairman of the Board shall
preside at meetings of the Board of Directors and the shareholders and perform
such other duties as may be designated by the Board of Directors or these By-
Laws. He shall be an ex-officio member of all committees of the Board of
Directors, except that he shall be a full member entitled to all the rights and
privileges appertaining thereto with respect to committees on which he is named
a full member.
8.4 THE PRESIDENT. The President shall, subject to the powers of the
Chairman of the Board, shall have general and active management of the business
of the Corporation, shall, unless otherwise provided by the Board, be the chief
executive and chief operating officer of the Corporation, shall supervise the
daily operations of the business of the Corporation and shall ensure that all
orders, policies and resolutions of the Board are carried out.
8.5 THE VICE PRESIDENTS. The Vice-Presidents (if any) shall perform
such duties as the President or the Board of Directors shall prescribe.
8.6 THE SECRETARY. The Secretary shall attend all meetings of the
Board of Directors and all meetings of the shareholders and record all votes
and the minutes of all proceedings in a book to be kept for that purpose. He
shall give, or cause to be given, notice of all meetings of the shareholders
and regular and special meetings of the Board, and shall perform such other
duties as may be prescribed by the Board or President. He shall keep in safe
custody the seal of the Corporation, if any, and affix the same to any
instrument requiring it.
8.7 THE TREASURER. The Treasurer shall have the custody of the
corporate funds and shall keep or cause to be kept full and accurate accounts
of receipts and disbursements in books belonging to the Corporation and shall
deposit all monies and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board of
Directors. He shall keep a proper accounting of all receipts and disbursements
and shall disburse the funds of the Corporation only for proper corporate
purposes or as may be ordered by the Board and shall render to the President
and the Board at the regular meetings of the Board, or whenever they may
require it, an account of all his transactions as Treasurer and of the
financial condition and results of operations of the Corporation.
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SECTION 9
STOCK
9.1 CERTIFICATES. Every holder of stock in the Corporation shall be
entitled to have a certificate signed by the President or a Vice President and
the Secretary or an Assistant Secretary evidencing the number and class (and
series, if any) of shares owned by him, containing such information as required
by law and bearing the seal of the Corporation. If any stock certificate is
manually signed by a transfer agent or registrar other than the Corporation
itself or an employee of the Corporation, the signature of any such officer may
be a facsimile. In case any officer, transfer agent or registrar who has
signed or whose facsimile signature has been place upon a certificate shall
have ceased to be an officer, transfer agent or registrar of the Corporation
before such certificate is issued, it may be issued by the Corporation with the
same effect as if such person or entity were an officer, transfer agent or
registrar of the Corporation on the date of issue.
9.2 MISSING CERTIFICATES. The President or any Vice President may
direct a new certificate or certificates to be issued in place of any
certificate or certificates theretofore issued by the Corporation alleged to
have been lost, stolen or destroyed, upon the Corporation's receipt of an
affidavit of that fact from the person claiming the certificate of stock to be
lost, stolen or destroyed. As a condition precedent to the issuance of a new
certificate or certificates, the officers of the Corporation shall, unless
dispensed with by the President, require the owner of such lost, stolen or
destroyed certificate or certificates, or his legal representative, to (i) give
the Corporation a bond or (ii) enter into a written indemnity agreement, in
each case in an amount appropriate to indemnify the Corporation against any
claim that may be made against the Corporation with respect to the certificate
alleged to have been lost, stolen or destroyed.
9.3 TRANSFERS. Upon compliance with the transfer restrictions
contained in the Articles of Incorporation and surrender to the Corporation or
the transfer agent of the Corporation of a certificate for shares duly endorsed
or accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the Corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books.
SECTION 10
DETERMINATION OF SHAREHOLDERS
10.1 RECORD DATE. For the purpose of determining shareholders
entitled to notice of and to vote at a meeting, or to receive a dividend, or to
receive or exercise subscription or other rights, or to participate in a
reclassification of stock, or in order to make a determination of shareholders
for any other proper purpose, the Board of Directors may fix in advance a
record date for determination of shareholders for such purpose, such date to be
not more than 60 days and, if fixed for the purpose of determining shareholders
entitled to notice of and to vote at a meeting, not less than 10 days, prior to
the date on which the action requiring the determination of shareholders is to
be taken.
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<PAGE> 12
10.2 REGISTERED SHAREHOLDERS. Except as otherwise provided by law,
the Corporation and its directors, officers and agents may recognize and treat
a person registered on its records as the owner of shares, as the owner in fact
thereof for all purposes, and as the person exclusively entitled to have and to
exercise all rights and privileges incident to the ownership of such shares,
and the Corporation's rights under this section shall not be affected by any
actual or constructive notice which the Corporation, or any of its directors,
officers or agents, may have to the contrary.
SECTION 11
INDEMNIFICATION
11.1 DEFINITIONS. As used in this section the following terms shall
have the meanings set forth below:
(a) "Board" - the Board of Directors of the Corporation.
(b) "Claim" - any threatened, pending or completed claim, action,
suit, or proceeding, whether civil, criminal, administrative or investigative
and whether made judicially or extra-judicially, or any separate issue or
matter therein, as the context requires.
(c) "Determining Body" - (i) those members of the Board who are not
named as parties to the Claim for which indemnification is being sought
("Impartial Directors") if there are at least three Impartial Directors, (ii) a
committee of at least three Impartial Directors appointed by the Board
(regardless whether the members of the Board of Directors voting on such
appointment are Impartial Directors) or (iii) if there are fewer than three
Impartial Directors or if the Board of Directors or the committee appointed
pursuant to clause (ii) of this paragraph so directs (regardless whether the
members thereof are Impartial Directors), independent legal counsel, which may
be the regular outside counsel of the Corporation.
(d) "Disbursing Officer" - the President of the Corporation or, if
the President is a party to the Claim for which indemnification is being
sought, any officer not a party to such Claim who is designated by the
President to be the Disbursing Officer with respect to indemnification requests
related to the Claim, which designations shall be made promptly after receipt
of the initial request for indemnification with respect to such Claim.
(e) "Expenses" - any expenses or costs (including, without
limitation, attorney's fees, judgments, punitive or exemplary damages, fines
and amounts paid in settlement).
(f) "Indemnitee" - each person who is or was a director or officer of
the Corporation.
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<PAGE> 13
11.2 INDEMNITY.
(a) To the extent such Expenses exceed the amounts reimbursed or paid
pursuant to policies of liability insurance maintained by the Corporation, the
Corporation shall indemnify each Indemnitee against any Expenses actually and
reasonably incurred by him (as they are incurred) in connection with any Claim
either against him or as to which he is involved solely as a witness or person
required to give evidence, by reason of his position (i) as director or officer
of the Corporation, (ii) as a director or officer of any subsidiary of the
Corporation or as a fiduciary with respect to any employee benefit plan of the
Corporation, or (iii) as a director, officer, partner, employee or agent of
another Corporation, partnership, joint venture, trust or other for-profit or
not-for-profit entity or enterprise, if such position is or was held at the
request of the Corporation, whether relating to service in such position before
or after the effective date of this Section , if he (i) is successful in his
defense of the Claim on the merits or otherwise or (ii) has been found by the
Determining Body (acting in good faith) to have met the Standard of Conduct
(defined below); provided that (A) the amount otherwise payable by the
Corporation may be reduced by the Determining Body to such amount as it deems
proper if it determines that the Claim involved the receipt of a personal
benefit by Indemnitee, and (B) no indemnification shall be made in respect of
any Claim as to which Indemnitee shall have been adjudged by a court of
competent jurisdiction, after exhaustion of all appeals therefrom, to be liable
for willful or intentional misconduct in the performance of his duty to the
Corporation or to have obtained an improper personal benefit, unless, and only
to the extent that, a court shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case,
Indemnitee is fairly and reasonably entitled to indemnity for such Expenses as
the court deems proper.
(b) The Standard of Conduct is met when the conduct by an Indemnitee
with respect to which a Claim is asserted was conduct that was in good faith
and that he reasonably believed to be in, or not opposed to, the best interest
of the Corporation, and, in the case of a criminal action or proceeding, that
he had no reasonable cause to believe was unlawful. The termination of any
Claim by judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that
Indemnitee did not meet the Standard of Conduct.
(c) Promptly upon becoming aware of the existence of any Claim as to
which he may be indemnified hereunder, Indemnitee shall notify the President of
the Corporation of the Claim and whether he intends to seek indemnification
hereunder. If such notice indicates that Indemnitee does so intend, the
President shall promptly advise the Board thereof and notify the Board that the
establishment of the Determining Body with respect to the Claim will be a
matter presented at the next regularly scheduled meeting of the Board. After
the Determining Body has been established the President shall inform the
Indemnitee thereof and Indemnitee shall immediately provide the Determining
Body with all facts relevant to the Claim known to him. Within 60 days of the
receipt of such information, together with such additional information as the
Determining Body may request of Indemnitee, the Determining Body shall
determine, and shall advise Indemnitee of its determination, whether Indemnitee
has met the Standard of Conduct.
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<PAGE> 14
(d) During such 60-day period, Indemnitee shall promptly inform the
Determining Body upon his becoming aware of any relevant facts not theretofore
provided by him to the Determining Body, unless the Determining Body has
obtained such facts by other means.
(e) In the case of any Claim not involving a proposed, threatened or
pending criminal proceeding,
(i) if Indemnitee has, in the good faith judgment of the
Determining Body, met the Standard of Conduct, the Corporation may, in its sole
discretion after notice to Indemnitee, assume all responsibility for the
defense of the Claim, and, in any event, the Corporation and the Indemnitee
each shall keep the other informed as to the progress of the defense, including
prompt disclosure of any proposals for settlement; provided that if the
Corporation is a party to the Claim and Indemnitee reasonably determines that
there is a conflict between the positions of the Corporation and Indemnitee
with respect to the Claim, then Indemnitee shall be entitled to conduct his
defense, with counsel of his choice; and provided further that Indemnitee shall
in any event be entitled at his expense to employ counsel chosen by him to
participate in the defense of the Claim; and
(ii) the Corporation shall fairly consider any proposals by
Indemnitee for settlement of the Claim. If the Corporation (A) proposes a
settlement acceptable to the person asserting the Claim, or (B) believes a
settlement proposed by the person asserting the Claim should be accepted, it
shall inform Indemnitee of the terms thereof and shall fix a reasonable date by
which Indemnitee shall respond. If Indemnitee agrees to such terms, he shall
execute such documents as shall be necessary to effect the settlement. If he
does not agree he may proceed with the defense of the Claim in any manner he
chooses, but if he is not successful on the merits or otherwise, the
Corporation's obligation to indemnify him for any Expenses incurred following
his disagreement shall be limited to the lesser of (A) the total Expenses
incurred by him following his decision not to agree to such proposed settlement
or (B) the amount the Corporation would have paid pursuant to the terms of the
proposed settlement. If, however, the proposed settlement would impose upon
indemnitee any requirement to act or refrain from acting that would materially
interfere with the conduct of his affairs, Indemnitee may refuse such
settlement and proceed with the defense of the Claim, if he so desires, at the
Corporation's expense without regard to the limitations imposed by the
preceding sentence. In no event, however, shall the Corporation be obligated
to indemnify Indemnitee for any amount paid in a settlement that the
Corporation has not approved.
(f) In the case of a Claim involving a proposed, threatened or
pending criminal proceeding, Indemnitee shall be entitled to conduct the
defense of the Claim, and to make all decisions with respect thereto, with
counsel of his choice, provide, however, that the Corporation shall not be
obligated to indemnify Indemnitee for an amount paid in settlement that the
Corporation has not approved.
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<PAGE> 15
(g) After notifying the Corporation of the existence of a Claim,
Indemnitee may from time to time request the Corporation to pay the Expenses
(other than judgments, fines, penalties or amounts paid in settlement) that he
incurs in pursuing a defense of the Claim prior to the time that the
Determining Body determines whether the Standard of Conduct has been met. If
the Disbursing Officer believes the amount requested to be reasonable, he shall
pay to Indemnitee the amount requested (regardless of Indemnitee's apparent
ability to repay such amount) upon receipt of an undertaking by or on behalf of
Indemnitee to repay such amount if it shall ultimately be determined that he is
not entitled to be indemnified by the Corporation under the circumstances. If
the Disbursing Officer does not believe such amount to be reasonable, the
Corporation shall pay the amount deemed by him to be reasonable and Indemnitee
may apply directly to the Determining Body for the remainder of the amount
requested.
(h) After the Determining Body has determined that the Standard of
Conduct was met, for so long as and to the extent that the Corporation is
required to indemnify Indemnitee under this Agreement, the provisions of
Paragraph (g) shall continue to apply with respect to Expenses incurred after
such time except that (i) no undertaking shall be required of Indemnitee and
(ii) the Disbursing Officer shall pay to Indemnitee such amount of any fines,
penalties or judgments against him which have become final as the Corporation
is obligated to indemnify him.
(i) Any determination by the Corporation with respect to settlements
of a Claim shall be made by the Determining Body.
(j) The Corporation and Indemnitee shall keep confidential, to the
extent permitted by law and their fiduciary obligations, all facts and
determinations provided or made pursuant to or arising out of the operation of
this Section, and the Corporation and Indemnitee shall instruct its or his
agents and employees to do likewise.
11.3 ENFORCEMENT.
(a) The rights provided by this Section shall be enforceable by
Indemnitee in any court of competent jurisdiction.
(b) If Indemnitee seeks a judicial adjudication of his rights under
this Section, Indemnitee shall be entitled to recover from the Corporation, and
shall be indemnified by the Corporation against any and all Expenses actually
and reasonably incurred by him in connection with such proceeding but only if
he prevails therein. If it shall be determined that Indemnitee is entitled to
receive part but not all of the relief sought, then the Indemnitee shall be
entitled to be reimbursed for all Expenses incurred by him in connection with
such judicial adjudication if the amount to which he is determined to be
entitled exceeds 50% of the amount of his claim. Otherwise, the Expenses
incurred by Indemnitee in connection with such judicial adjudication shall be
appropriately prorated.
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<PAGE> 16
(c) In any judicial proceeding described in this subsection, the
Corporation shall bear the burden of proving that Indemnitee is not entitled to
any Expenses sought with respect to any Claim.
11.4 SAVING CLAUSE.
If any provision of this Section is determined by a court having
jurisdiction over the matter to require the Corporation to do or refrain from
doing any act that is in violation of applicable law, the court shall be
empowered to modify or reform such provision so that, as modified or reformed,
such provision provides the maximum indemnification permitted by law, and such
provision, as so modified or reformed, and the balance of this Section, shall
be applied in accordance with their terms. Without limiting the generality of
the foregoing, if any portion of this Section shall be invalidated on any
ground, the Corporation shall nevertheless indemnify an Indemnitee to the full
extent permitted by any applicable portion of this Section that shall not have
been invalidated and to the full extent permitted by law with respect to that
portion that has been invalidated.
11.5 NON-EXCLUSIVITY.
(a) The indemnification and advancement of Expenses provided by or
granted pursuant to this Section shall not be deemed exclusive of any other
rights to which Indemnitee is or may become entitled under any statute, article
of incorporation, by-law, authorization of shareholders or directors,
agreement, or otherwise.
(b) It is the intent of the Corporation by this Section to indemnify
and hold harmless Indemnitee to the fullest extent permitted by law, so that if
applicable law would permit the Corporation to provide broader indemnification
rights than are currently permitted, the Corporation shall indemnify and hold
harmless Indemnitee to the fullest extent permitted by applicable law
notwithstanding that the other terms of this Section would provide for lesser
indemnification.
11.6 SUCCESSORS AND ASSIGNS. This Section shall be binding upon the
Corporation, its successors and assigns, and shall inure to the benefit of the
Indemnitee's heirs, personal representatives, and assigns and to the benefit of
the Corporation, its successors and assigns.
11.7 INDEMNIFICATION OF OTHER PERSONS. The Corporation may indemnify
any person not covered by Sections 11.1 through 11.6 to the extent provided in
a resolution of the Board or a separate section of these By-Laws.
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SECTION 12
AMENDMENTS
12.1 ADOPTION OF BY-LAWS; AMENDMENTS THEREOF. By-Laws of the
Corporation may be adopted, amended or repealed only by a majority vote of the
Board of Directors subject to any power granted by the LCBL to shareholders to
change or repeal any By-Laws so adopted or amended.
12.2 NEW BY-LAWS; AMENDMENTS. Any purported amendment to these By-
Laws which would add hereto a matter not expressly covered herein prior to such
purported amendment shall be deemed to constitute the adoption of a By-law
provision and not an amendment to the By-Laws.
SECTION 13
MISCELLANEOUS
13.1 DIVIDENDS. Except as otherwise provided by law or the Articles
of Incorporation, dividends upon the stock of the Corporation may be declared
by the Board of Directors at any regular or special meeting. Dividends may be
paid in cash, property, or in shares of stock, subject to the limitations
specified in the Articles of Incorporation.
13.2 VOTING OF SHARES OWNED BY CORPORATION. Unless otherwise directed
by the Board, any shares of capital stock issued by a wholly-owned subsidiary
of the Corporation may be voted by the President of the Corporation at any
shareholders' meeting of the subsidiary (or in connection with any written
consent in lieu thereof).
13.3 CHECKS. All checks or demands for money and notes of the
Corporation shall be signed by such officer or officers or such other person or
persons as the Board of Directors may from time to time designate. Signatures
of the authorized signatories may be by facsimile.
13.4 FISCAL YEAR. The Board of Directors may adopt for and on behalf
of the Corporation a fiscal or a calendar year.
13.5 SEAL. The Board of Directors may adopt a corporate seal, which
shall have inscribed thereon the name of the Corporation. The seal may be used
by causing it or a facsimile thereof to be impressed or affixed or reproduced
or otherwise. Failure to affix the seal shall not, however, affect the validity
of any instrument.
13.6 GENDER. All pronouns and variations thereof used in these By-
Laws shall be deemed to refer to the masculine, feminine or neuter gender,
singular or plural, as the identity of the person, persons, entity or entities
referred to may require.
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<PAGE> 1
EXHIBIT 4.44
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT ("Pledge Agreement"), dated as of December 20,
1993, is executed by and among the owners of the capital stock of
MISSISSIPPI-34 CELLULAR CORPORATION, a Mississippi corporation ("Borrower")
listed on the signature pages hereto ("Pledgors"), and AT&T Credit Corporation
(the "Lender"). Capitalized terms used herein and not otherwise defined herein
shall have the respective meanings ascribed to such terms in the Loan
Agreement.
WITNESSETH:
WHEREAS, the Borrower and Lender have entered into a certain Loan and
Security Agreement of even date herewith (as amended, restated, supplemented or
otherwise modified from time to time, the "Loan Agreement"), pursuant to which
Lender has agreed, subject to certain conditions precedent, to make loans to
Borrower from time to time;
WHEREAS, each of the Pledgors owns that percentage of the issued and
outstanding capital stock of the Borrower set forth on Exhibit A hereto and
will derive direct and indirect economic benefit from the loans made to the
Borrower under the Loan Agreement;
WHEREAS, the Lender has required, as a condition to its entering into
the Loan Agreement, that the Pledgors execute and deliver this Pledge
Agreement; and
WHEREAS, the Pledgors desire to secure their "Liabilities" (as
hereinafter defined) to the Lender by the grant to the Lender of a first
priority security interest in the "Pledged Collateral" (as hereinafter
defined);
NOW, THEREFORE, for and in consideration of the foregoing and of any
financial accommodations or extensions of credit (including, without
limitation, any loan or advance by renewal, refinancing or extension of the
agreements described hereinabove or otherwise) heretofore, now or hereafter
made to or for the benefit of the Borrower pursuant to the Loan Agreement or
any other agreement, instrument or document executed pursuant to or in
connection therewith and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Pledgors and the Lender
hereby agree as follows:
1. Pledge. Each Pledgor hereby pledges to the Lender, and grants to
the Lender a security interest in, the following (collectively, the "Pledged
Collateral"):
(a) the shares of the capital stock of the Borrower, now or at any
time or times hereafter owned by such Pledgor, and the certificates
representing the shares of such capital stock (as identified on Exhibit A
attached hereto and made a part
<PAGE> 2
hereof), all options and warrants for the purchase of shares of the stock of
the Borrower now or hereafter held in the name of such Pledgor (all of said
capital stock, options and warrants and all capital stock held in the name of
such Pledgor as a result of the exercise of such options or warrants being
hereinafter collectively referred to as the "Pledged Stock"), herewith
delivered to the Lender accompanied by stock powers in the form of Exhibit B
attached hereto and made a part hereof ("Powers") duly executed in blank, and
all dividends, cash, instruments and other property from time to time received,
receivable or otherwise distributed in respect of, or in exchange for, any or
all of such shares;
(b) all additional shares of stock of the Borrower from time to time
acquired by such Pledgor in any manner, and the certificates representing such
additional shares (any such additional shares shall constitute part of the
Pledged Stock and shall be listed on Exhibit A), and all options, warrants,
dividends, cash, instruments and other rights and options from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of such shares;
(c) the property and interests in property described in paragraph 3
below; and
(d) all proceeds of the foregoing.
2. Security for Liabilities. The Pledged Collateral secures the
prompt payment, performance and observance of (i) the Borrower's obligations
and liabilities under the Loan Agreement and the Loan Documents and (ii) each
Pledgor's obligations and liabilities under this Pledge Agreement and each
agreement, document or instrument executed pursuant to or in connection with
this Pledge Agreement (all such obligations and liabilities described in (i)
and (ii) above and now or hereafter existing being hereinafter referred to
collectively as the "Liabilities").
3. Pledged Collateral Adjustments. If, during the term of this
Pledge Agreement:
(a) any stock dividend, reclassification, readjustment or other
change is declared or made in the capital structure of the Borrower, or any
option included within the Pledged Collateral is exercised, or both, or
(b) subscription warrants or any other rights or options shall be
issued in connection with the Pledged Collateral, then all new, substituted and
additional shares, warrants, rights, options or other securities, issued by
reason of any of the foregoing, shall be immediately delivered to and held by
the Lender under the terms of this Pledge Agreement and shall constitute
Pledged Collateral hereunder; provided, however, that nothing contained in this
paragraph 3 shall be deemed to permit any stock dividend, issuance of
additional stock, warrants, rights or options, reclassification, readjustment
or
<PAGE> 3
other change in the capital structure of the Borrower which is not expressly
permitted in the Loan Agreement.
4. Subsequent Changes Affecting Pledged Collateral. Each Pledgor
represents and warrants that it has made its own arrangements for keeping
informed of changes or potential changes affecting the Pledged Collateral
(including, but not limited to, rights to convert, rights to subscribe, payment
of dividends, reorganization or other exchanges, tender offers and voting
rights), and each Pledgor agrees that the Lender shall have no obligation to
inform any Pledgor of any such changes or potential changes or to take any
action or omit to take any action with respect thereto. The Lender may, after
the occurrence of an Event of Default, with notice and at its option, transfer
or register the Pledged Collateral or any part thereof into its or its
nominee's name with or without any indication that such Pledged Collateral is
subject to the security interest hereunder. In addition, the Lender may at any
time exchange certificates or instruments representing or evidencing Pledged
Shares for certificates or instruments of smaller or larger denominations.
5. Representations and Warranties. Each Pledgor represents and
warrants as follows:
(a) such Pledgor is the sole legal and beneficial owner of
that percentage of the issued and outstanding capital stock of the Borrower set
forth on Exhibit A, free and clear of any Lien except for the security interest
created by this Pledge Agreement;
(b) such Pledgor has full corporate power and authority to
enter into this Pledge Agreement;
(c) there are no restrictions upon the voting rights
associated with, or upon the transfer of, any of the Pledged Collateral except
as set forth in the Shareholders Agreement;
(d) such Pledgor has the right to vote, pledge and grant a
security interest in or otherwise transfer such Pledged Collateral free of any
Liens except as set forth in the Shareholders Agreement;
(e) no authorization, approval, or other action by, and no
notice to or filing with, any governmental authority or regulatory body is
required either (i) for the pledge of such Pledgor's Pledged Collateral
pursuant to this Agreement or for the execution, delivery or performance of
this Agreement by such Pledgor or (ii) for the exercise by the Lender of the
voting or other rights provided for in this Agreement or the remedies in
respect of the Pledged Collateral pursuant to this Agreement (except as may be
required (x) in connection with such disposition by laws affecting the offering
and sale of securities generally and (y) by the FCC or PUC);
(f) the pledge of such Pledgor's Pledged Collateral pursuant
to this Pledge Agreement creates a valid and perfected
<PAGE> 4
first priority security interest in such Pledged Collateral, in favor of the
Lender, securing the payment and performance of the Liabilities; and
(g) the Powers are duly executed and give the Lender the
authority they purport to confer.
6. Voting Rights. During the term of this Pledge Agreement,
and except as provided in this Section 6 below, each Pledgor shall have the
right to vote the Pledged Stock on all corporate questions in a manner not
inconsistent with the terms of this Pledge Agreement, the Loan Agreement and
any other agreement, instrument or document executed pursuant thereto or in
connection therewith. After the occurrence of an Event of Default, the Lender
may, at the Lender's option and following written notice from the Lender to the
Pledgors, exercise all voting powers pertaining to the Pledged Collateral.
7. Dividends and Other Distributions.
(a) So long as no Event of Default shall have occurred and be
continuing:
(i) Each Pledgor shall be entitled to receive and retain any
and all dividends and interest paid in respect of such Pledgor's Pledged
Collateral to the extent the Borrower is permitted to make such payments under
the Loan Agreement, provided, however, that any and all
(A) dividends and interest paid or payable other than
in cash with respect to, and instruments and other property received,
receivable or otherwise distributed with respect to, or in exchange for, any of
the Pledged Collateral;
(B) dividends and other distributions paid or payable
in cash with respect to any of the Pledged Collateral on account of a partial
or total liquidation or dissolution or in connection with a reduction of
capital, capital surplus or paid-in surplus; and
(C) cash paid, payable or otherwise distributed with
respect to principal of, or in redemption of, or in exchange for, any of the
Pledged Collateral; shall be, and shall be forthwith delivered to the Lender to
hold as, Pledged Collateral and shall, if received by such Pledgor, be received
in trust for the Lender, be segregated from the other property or funds of such
Pledgor, and be delivered immediately to the Lender as Pledged Collateral in
the same form as so received (with any necessary endorsement); and
(ii) The Lender shall execute and deliver (or cause to be
executed and delivered) to each Pledgor all such proxies and other instruments
as such Pledgor may reasonably request for the purpose of enabling such Pledgor
to receive the dividends or interest payments which it is authorized to receive
and retain pursuant to paragraph (i) above.
<PAGE> 5
(b) After the occurrence of an Event of Default:
(i) All rights of each Pledgor to receive the dividends and
interest payments which it would otherwise be authorized to receive and retain
pursuant to Section 7(a)(i) hereof shall cease, and all such rights shall
thereupon become vested in the Lender, which shall thereupon have the sole
right to receive and hold as Pledged Collateral such dividends and interest
payments;
(ii) all dividends and interest payments which are received by
each Pledgor contrary to the provisions of paragraph (i) of this Section 7(b)
shall be received in trust for the Lender, shall be segregated from other funds
of such Pledgor and shall be paid over immediately to the Lender as Pledged
Collateral in the same form as so received (with any necessary endorsements);
and
(iii) each Pledgor shall, upon the request of the Lender, at
Pledgor's expense, do or cause to be done all such other acts and things as may
be necessary to make such sale of such Pledgor's Pledged Collateral or any part
thereof valid and binding and in compliance with applicable law. Each Pledgor
will reimburse the Lender for all expenses incurred by the Lender, including,
without limitation, reasonable attorneys' and accountants' fees and expenses in
connection with the foregoing to the extent that such expenses relate to the
Pledgor's Pledged Collateral.
8. Transfers and Other Liens. Each Pledgor agrees that it
will not (i) sell or otherwise dispose of, or grant any option with respect to,
any of the Pledged Collateral without the prior written consent of the Lender,
or (ii) create or permit to exist any Lien upon or with respect to any of the
Pledged Collateral, except for the security interest under this Agreement.
9. Remedies.
(a) The Lender shall have, in addition to any other rights
given under this Pledge Agreement or by law, all of the rights and remedies
with respect to the Pledged Collateral of a secured party under the Uniform
Commercial Code as in effect in the State of New Jersey. In addition, after the
occurrence of an Event of Default, the Lender shall have such powers of sale
and other powers as may be conferred by applicable law. With respect to the
Pledged Collateral or any part thereof which shall then be in or shall
thereafter come into the possession or custody of the Lender or which the
Lender shall otherwise have the ability to transfer under applicable law, the
Lender may, in its sole discretion, without notice except as specified below,
after the occurrence of an Event of Default, sell or cause the same to be sold
at any exchange, broker's board or at public or private sale, in one or more
sales or lots, at such price as the Lender may deem best, for cash or on credit
or for future delivery,
<PAGE> 6
without assumption of any credit risk, and the purchaser of any or all of the
Pledged Collateral so sold shall thereafter own the same, absolutely free from
any claim, encumbrance or right of any kind whatsoever. The Lender may, in its
own name, or in the name of a designee or nominee, buy the Pledged collateral
at any public sale and, if permitted by applicable law, buy the Pledged
Collateral at any private sale. In accordance with the requirements of 47
C.F.R. Section 22.917 (1985), or any successor provision thereto, the Lender
shall notify the Borrower and the FCC in writing at least ten (10) days prior
to the repossession, in accordance with the Loan Documents, of all or any part
of the System which is subject to said regulation. Each Pledgor shall be
severally liable to the Lender for all reasonable expenses (including, without
limitation, court costs and reasonable attorneys' and paralegals' fees and
expenses) of, or incident to, the enforcement of any of the provisions hereof.
The Lender agrees to distribute any proceeds of the sale of the Pledged
Collateral in accordance with the Loan Agreement.
(b) Unless any of the Pledged Collateral threatens to decline
speedily in value or is or becomes of a type sold on a recognized market, the
Lender will give the Pledgors reasonable notice of the time and place of any
public sale thereof, or of the time after which any private sale or other
intended disposition is to be made. Any sale of the Pledged Collateral
conducted in conformity with reasonable commercial Practices of banks,
commercial finance companies, insurance companies or other financial
institutions disposing of property similar to the Pledged Collateral shall be
deemed to be commercially reasonable. Notwithstanding any Provision to the
contrary contained herein, any requirements of reasonable notice shall be met
if such notice is received by the Pledgors as provided in paragraph 19 below,
at least five (5) Business Days before the time of the sale or disposition. Any
other requirement of notice, demand or advertisement for sale is waived, to the
extent Permitted by law.
(c) In view of the fact that federal and state securities laws
may impose certain restrictions on the method by which a sale of the Pledged
Collateral may be effected after an Event of Default, the Pledgors agree that
after the occurrence of an Event of Default, the Lender may, from time to time,
attempt to sell all or any part of the Pledged Collateral by means of a private
placement restricting the bidders and prospective purchasers to those who are
qualified and will represent and agree that they are purchasing for investment
only and not for distribution. In so doing, the Lender may solicit offers to
buy the Pledged Collateral, or any part of it, from a limited number of
investors deemed by the Lender, in its reasonable judgment, to be financially
responsible parties who might be interested in purchasing the Pledged
Collateral. If the Lender solicits such offers from not less than three (3)
such investors, then the acceptance by the Lender of the highest offer obtained
therefrom shall be deemed to be a commercially reasonable method of disposing
of such Pledged Collateral.
<PAGE> 7
(d) In connection with the enforcement by the Lender of any
remedies available to the Lender as a result of any Event of Default, each
Pledgor agrees to, and to use its best efforts to cause the Borrower to join
and cooperate fully, in each case at the Lender's election, with the Lender,
any receiver referred to below and/or the successor bidder or bidders at any
foreclosure sale in a filing of an application (and furnishing any additional
information that may be required in connection with such application) with the
FCC, the PUC and all applicable federal, state and local governmental
authorities, requesting their prior approval of (i) the operation or
abandonment of all or any portion of the System and/or (ii) the transfer of
control of the Borrower or assignment of all licenses, certificates,
authorizations, approvals and permits, issued to the Borrower by the FCC, the
PUC or any such authorities with respect to the System and the operation
thereof, to the receiver or to the successful bidder or bidders, including
without limitation, the Lender. In connection with the foregoing, each Pledgor
agrees to use its best efforts to cause the Borrower to take such further
actions, and execute all such instruments, as the Lender reasonably deems
necessary or desirable. Each Pledgor agrees that the Lender may enforce any
obligations of such Pledgor as set forth in this Paragraph by an action for
specific performance.
(e) Notwithstanding any other Provision of this Agreement to
the contrary, the exercise of any rights hereunder by the Lender that may
require FCC or PUC approval shall be subject to obtaining such approval.
Pending obtaining the FCC or PUC approval no Pledgor will do anything to delay,
hinder, interfere or obstruct the exercise of the Lender's rights hereunder in
obtaining such approvals.
(f) In connection with the exercise of its remedies under this
Agreement, Lender may, upon the occurrence of an Event of Default obtain the
appointment of a receiver or trustee to assume, upon receipt of all necessary
judicial, FCC or other governmental authority, consents or approvals, control
of or ownership of any Pledgor's Pledged Collateral. Such receiver or trustee
shall have all rights and powers Provided to it by law or by court order or
Provided to Lender under this Agreement. Upon the appointment of such trustee or
receiver, such Pledgor agrees to cooperate, to the extent necessary or
appropriate, in the expeditious preparation, execution and filing of an
application to the FCC or PUC for consent to the transfer of control or
assignment of the Construction Permits or the Operating Licenses or the
Certificate of the Borrower to the receiver or trustee.
10. Security Interest Absolute. All rights of the Lender and
security interests hereunder, and all obligations of the Pledgors hereunder,
shall be absolute and unconditional irrespective of:
(i) any lack of validity or enforceability of the Loan
Agreement or any other agreement or instrument relating thereto;
<PAGE> 8
(ii) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Liabilities, or any other amendment or
waiver of or any consent to any departure from the Loan Agreement;
(iii) any exchange, release or non-perfection of any other
collateral, or any release or amendment or waiver of or consent to departure
from any guaranty, for all or any of the Liabilities; or
(iv) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, any Pledgor in respect of the
Liabilities or of this Agreement.
11. Lender Appointed Attorney-in-Fact. Each Pledgor hereby
appoints the Lender its attorney-in-fact, with full authority, in the name of
such Pledgor or otherwise, after the occurrence of an Event of Default, from
time to time in the Lender's discretion, to take any action and to execute any
instrument which the Lender may deem necessary or advisable to accomplish the
purposes of this Pledge Agreement, including, without limitation, to receive,
endorse and collect all instruments made payable to such Pledgor representing
any dividend, interest payment or other distribution in respect of the Pledged
Collateral or any part thereof and to give full discharge for the same and to
arrange for the transfer of all or any part of the Pledged Collateral on the
books of the Borrower to the name of the Lender or the Lender's nominee.
12. Waivers. Each Pledgor waives presentment and demand for
payment of any of the Liabilities, protest and notice of dishonor or Event of
Default with respect to any of the Liabilities and all other notices to which
such Pledgor might otherwise be entitled except as otherwise expressly provided
herein or in the Loan Agreement.
13. Term. This Pledge Agreement shall remain in full force and
effect until the Liabilities and the Obligations have been fully and
indefeasibly paid and satisfied and the Loan Agreement has terminated pursuant
to its terms. Upon the termination of this Pledge Agreement as provided above
(other than as a result of the sale of the Collateral), the Lender will release
the security interest created hereunder and will deliver the Pledged Stock and
the Powers to the appropriate Pledgors.
14. Definitions. The singular shall include the plural and
vice versa and any gender shall include any other gender as the context may
require.
15. Successors and Assigns. This Pledge Agreement shall be
binding upon and inure to the benefit of the Pledgors, the Lender and their
respective successors and assigns. Each Pledgor's successors and assigns shall
include, without limitation, a receiver, trustee or debtor in possession of or
for such Pledgor.
<PAGE> 9
16. Applicable Law; Severability. This Pledge Agreement shall
be governed by, and construed in accordance with, the internal laws (as opposed
to the conflict of laws Provisions) and decisions of the State of New Jersey.
Whenever possible, each Provision of this Pledge Agreement shall be interpreted
in such manner as to be effective and valid under applicable law, but, if any
provision of this Pledge Agreement shall be held to be prohibited or invalid
under applicable law, such provision shall be ineffective only to the extent of
such Prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Pledge Agreement. Furthermore, if
any term or provision hereof is held to be inconsistent with the Communications
Act of 1934, as amended, 47 U.S.C. 151 et seg., or with the Rules and
Regulations of the FCC, or otherwise illegal or invalid for any reason, such
provision shall not affect the remainder hereof, and the parties shall promptly
cooperate in good faith to modify this Agreement, so as to avoid any impairment
of Lender's security interest in the Pledged Collateral.
17. Further Assurances. Each Pledgor agrees that it will
cooperate with the Lender and will execute and deliver, or cause to be executed
and delivered, all such other stock powers, proxies, instruments and documents,
and will take all such other action, including, without limitation, the filing
of financing statements, as the Lender may reasonably request from time to time
in order to carry out the provisions and purposes of this Pledge Agreement.
18. The Lender's Duty of Care. The Lender shall not be liable
for any acts, omissions, errors of judgment or mistakes of fact or law
including, without limitation, acts, omissions, errors or mistakes with respect
to the Pledged Collateral, except for those arising out of or in connection
with the Lender's (i) gross negligence or willful misconduct, or (ii) failure
to use reasonable care with respect to the safe custody of the Pledged
Collateral in the Lender's possession. Without limiting the generality of the
foregoing, the Lender shall be under no obligation to take any steps necessary
to preserve rights in the Pledged Collateral against any other parties but may
do so at its option. All expenses incurred in connection therewith shall be for
the sole account of the Pledgors, who shall have several liability therefor,
and shall constitute part of the Liabilities secured hereby.
19. Notices. All notices and other communications required or
desired to be served, given or delivered hereunder shall be made in writing or
by a telecommunications device capable of creating a written record and shall
be addressed, if to any Pledgor, to the address set forth below the signature
line of such Pledgor, and
if to the Lender, c/o
AT&T Capital Corporation/Capital Markets Division
44 Whippany Road
<PAGE> 10
Morristown, NJ 07962-1983
Attention: Operations Manager
Telecopy: (201) 397-4368
Confirmation: (201) 397-3429
with a copy to
AT&T Capital Corporation/Capital Markets Division
44 Whippany Road
Morristown, NJ 07962-1983
Attention: Chief Counsel
Telecopy: (201) 397-3165
Confirmation: (201) 397-4190
or, as to each party, at such other address as designated by such party in a
written notice to the other party. All such notices and communications shall be
deemed to be validly served, given or delivered (i) three (3) days following
deposit in the United States mails, with proper postage prepaid; (ii) upon
delivery thereof if delivered by hand to the party to be notified; or (iii)
upon acknowledgment of receipt thereof if transmitted by such a
telecommunications device.
20. Effect on Shareholders Agreement. The Pledgors and the
Borrower hereby agree that, notwithstanding any contrary provision in the
Shareholders Agreement among the Pledgors and the Borrower, the Lender shall be
permitted to exercise any and all of its rights and remedies under this Pledge
Agreement, including, without limitation, the right to foreclose upon or sell
the Pledged Collateral, free and clear of any restriction on the Pledged
Collateral contained in the Shareholders Agreement.
21. Amendments, Waivers and Consents. No amendment or waiver
of any provision of this Agreement nor consent to any departure by any Pledgor
herefrom, shall in any event be effective unless the same shall be in writing
and signed by the Lender, and then such amendment, waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
22. Section Headings. The section headings herein are for
convenience of reference only, and shall not affect in any way the
interpretation of any of the provisions hereof.
23. Execution in Counterparts. This Agreement may be
executed in any number of counterparts, each of which shall be an original, but
all of which shall together constitute one and the same agreement.
<PAGE> 11
IN WITNESS WHEREOF, the Pledgors and the Lender have executed this Pledge
Agreement as of the 20th day of December, 1993.
MERCURY, INC.
By: /s/ WILLIAM T. HENNING, JR.
------------------------------
Name:
Title: President
Address: CM Tower, Suite 1495
One Lakeshore Drive
Lake Charles, LA 70602
Telecopy: (318) 433-0587
Confirmation: (318) 436-9000
/s/ DAVID A. BAILEY
-------------------------------------
David Bailey
Home
Address: 807 Church Street
Port Gibson, MS 39150
/s/ E. B. MARTIN, JR.
-------------------------------------
E. B. Martin, Jr.
Home
Address: 2306 Twin Lakes Circle
Jackson, MS 39211
Office
Address: Young, Scanlon, Sessums
P.O. Box 23059
Jackson, MS 39225-3059
Telecopy: (601) 355-6136
/s/ ROBERT MOUNGER
---------------------------------------
Robert Mounger
Home
Address: 4321 E. Manor Ct.
Jackson, MS 39502
Office
Address: 200 East Capitol Street
Suite 1601
Jackson, MS 39201
Telecopy: (601) 354-8329
<PAGE> 12
/s/ WILLIAM M. MOUNGER, II
------------------------------------------
William M. Mounger, II
Home
Address: 1521 St. Ann Street
Jackson, MS 39202
Office
Address: 1410 Livingston Lane
Jackson, MS 39213-8003
Telecopy: (601) 362-2664
/s/ JAMES A. MURRELL, III
------------------------------------------
James A. Murrell, III
Home
Address: 107 Pondside Lane
Madison, MS 39110
Office
Address: 1410 Livingston Lane
Jackson, MS 39213-8003
Telecopy: (601) 362-2664
/s/ WILLIAM M. YANDELL, III
----------------------------------------
William M. Yandell, III
Home
Address: 6082 Woodway Drive
Memphis, TN 38120
Office
Address: 2600 Insurance Center Dr.
Suite 200A
Jackson, MS 39216
Telecopy: (601) 362-4711
/s/ WIRT A. YERGER, III
----------------------------------------
Wirt A. Yerger, III
Home
Address: 2125 Heritage Hills Dr.
Jackson, MS 39211
Office
Address: 2600 Insurance Center Dr.
Suite 200A
Jackson, MS 39216
Telecopy: (601) 362-4711
<PAGE> 13
Home
Address: 2125 Heritage Hills Dr.
Jackson, MS 39211
Office
Address: 200 East Capitol Street
Suite 1647
Jackson, MS 39201
Telecopy: (601) 355-3227
AT&T CREDIT CORPORATION
By: /s/ EDWARD W. ANDREWS, JR.
-----------------------------------
Name: Edward W. Andrews, Jr.
Title: Senior Vice President
ACCEPTED AND AGREED TO
WITH RESPECT TO PARAGRAPH 20
MISSISSIPPI-34 CELLULAR CORPORATION
By:
--------------------------------------
Name:
Title:
<PAGE> 14
AT&T CREDIT CORPORATION
By:
---------------------------------
Name:
Title:
ACCEPTED AND AGREED TO
WITH RESPECT TO PARAGRAPH 20
MISSISSIPPI-34 CELLULAR CORPORATION
By: /s/ WILLIAM L. HENNING, JR.
-----------------------------
Name:
Title: President
<PAGE> 15
ACKNOWLEDGMENT
The undersigned hereby acknowledges receipt of a copy of the foregoing
Pledge Agreement, agrees promptly to note on its books the security interests
granted under such Pledge Agreement, and waives any rights or requirement at
any time hereafter to receive a copy of such Pledge Agreement in connection
with the registration of any Pledged Collateral in the name of the Lender or
its nominee or the exercise of voting rights by the Lender.
MISSISSIPPI-34 CELLULAR CORPORATION
By: /s/ WILLIAM L. HENNING, JR.
-----------------------------
Name:
Title: President
<PAGE> 16
INCORPORATED UNDER THE LAWS OF THE STATE OF MISSISSIPPI
NUMBER [LOGO] SHARES
53 -1,313-
MISSISSIPPI-34 CELLULAR CORPORATION
AUTHORIZED TO ISSUE 100,000 SHARES-PAR VALUE $.01 PER SHARE
This Certifies that Mercury, Inc. is the registered holder of One Thousand
Three Hundred Thirteen Shares of the capital stock of the above named
corporation, fully paid and non-assessable, transferable only on the books of
the Corporation by the holder hereof in person or by Attorney upon surrender of
this Certificate properly endorsed.
In Witness Whereof, the said Corporation has caused this Certificate to be
signed by its duly authorized officers and its Corporate Seal to be hereunto
affixed this 19th day of April A.D. 1993
[SEAL]
/s/ WILLIAM M. MOUNGER II /s/ WILLIAM L. HENNING, JR.
- ------------------------------ ------------------------------
SECRETARY PRESIDENT
WILLIAM M. MOUNGER II WILLIAM L. HENNING, JR.
<PAGE> 17
INCORPORATED UNDER THE LAWS OF THE STATE OF MISSISSIPPI
NUMBER [LOGO] SHARES
39 3,625
MISSISSIPPI-34 CELLULAR CORPORATION
AUTHORIZED TO ISSUE 100,000 SHARES-PAR VALUE $.01 PER SHARE
This Certifies that Mercury, Inc. is the registered holder of Three Thousand
Six Hundred Twenty-five Shares of the capital stock of the above named
corporation, fully paid and non-assessable, transferable only on the books of
the Corporation by the holder hereof in person or by Attorney upon surrender of
this Certificate properly endorsed.
In Witness Whereof, the said Corporation has caused this Certificate to be
signed by its duly authorized officers and its Corporate Seal to be hereunto
affixed this 20th day of November A.D. 1992
[SEAL]
/s/ WILLIAM M. MOUNGER II /s/ WILLIAM M. YANDELL III
- ------------------------------ ------------------------------
SECRETARY PRESIDENT
WILLIAM M. MOUNGER II WILLIAM M. YANDELL III
<PAGE> 18
INCORPORATED UNDER THE LAWS OF THE STATE OF MISSISSIPPI
NUMBER [LOGO] SHARES
40 162
MISSISSIPPI-34 CELLULAR CORPORATION
AUTHORIZED TO ISSUE 100,000 SHARES-PAR VALUE $.01 PER SHARE
This Certifies that Mercury, Inc. is the registered holder of One Hundred
Sixty-two Shares of the capital stock of the above named corporation, fully
paid and non-assessable, transferable only on the books of the Corporation by
the holder hereof in person or by Attorney upon surrender of this Certificate
properly endorsed.
In Witness Whereof, the said Corporation has caused this Certificate to be
signed by its duly authorized officers and its Corporate Seal to be hereunto
affixed this 20th day of November A.D. 1992
[SEAL]
/s/ WILLIAM M. MOUNGER II /s/ WILLIAM M. YANDELL III
- ------------------------------ ------------------------------
SECRETARY PRESIDENT
WILLIAM M. MOUNGER II WILLIAM M. YANDELL III
<PAGE> 19
INCORPORATED UNDER THE LAWS OF THE STATE OF MISSISSIPPI
NUMBER [LOGO] SHARES
13 2,500
MISSISSIPPI-34 CELLULAR CORPORATION
AUTHORIZED TO ISSUE 100,000 SHARES-PAR VALUE $.01 PER SHARE
This Certifies that David Bailey is the registered holder of Two Thousand Five
Hundred Shares of the capital stock of the above named corporation, fully paid
and non-assessable, transferable only on the books of the Corporation by the
holder hereof in person or by Attorney upon surrender of this Certificate
properly endorsed.
In Witness Whereof, the said Corporation has caused this Certificate to be
signed by its duly authorized officers and its Corporate Seal to be hereunto
affixed this 14th day of April A.D. 1992
[SEAL]
/s/ WILLIAM M. MOUNGER II /s/ WILLIAM M. MOUNGER, II
- ------------------------------ ------------------------------
SECRETARY PRESIDENT
WILLIAM M. MOUNGER II WILLIAM M. MOUNGER, II
<PAGE> 20
INCORPORATED UNDER THE LAWS OF THE STATE OF MISSISSIPPI
NUMBER [LOGO] SHARES
50 -180-
MISSISSIPPI-34 CELLULAR CORPORATION
AUTHORIZED TO ISSUE 100,000 SHARES-PAR VALUE $.01 PER SHARE
This Certifies that E. B. Martin, Jr. is the registered holder of One Hundred
Eighty Shares of the capital stock of the above named corporation, fully paid
and non-assessable, transferable only on the books of the Corporation by the
holder hereof in person or by Attorney upon surrender of this Certificate
properly endorsed.
In Witness Whereof, the said Corporation has caused this Certificate to be
signed by its duly authorized officers and its Corporate Seal to be hereunto
affixed this 20th day of November A.D. 1992
[SEAL]
/s/ WILLIAM M. MOUNGER II /s/ WILLIAM M. YANDELL III
- ------------------------------ ------------------------------
SECRETARY PRESIDENT
WILLIAM M. MOUNGER II WILLIAM M. YANDELL III
<PAGE> 21
INCORPORATED UNDER THE LAWS OF THE STATE OF MISSISSIPPI
NUMBER [LOGO] SHARES
48 -326.4-
MISSISSIPPI-34 CELLULAR CORPORATION
AUTHORIZED TO ISSUE 100,000 SHARES-PAR VALUE $.01 PER SHARE
This Certifies that Robert G. Mounger is the registered holder of Three Hundred
Twenty-six and 4/10 Shares of the capital stock of the above named corporation,
fully paid and non-assessable, transferable only on the books of the
Corporation by the holder hereof in person or by Attorney upon surrender of
this Certificate properly endorsed.
In Witness Whereof, the said Corporation has caused this Certificate to be
signed by its duly authorized officers and its Corporate Seal to be hereunto
affixed this 20th day of November A.D. 1992
[SEAL]
/s/ WILLIAM M. MOUNGER II /s/ WILLIAM M. YANDELL III
- ------------------------------ ------------------------------
SECRETARY PRESIDENT
WILLIAM M. MOUNGER II WILLIAM M. YANDELL III
<PAGE> 22
INCORPORATED UNDER THE LAWS OF THE STATE OF MISSISSIPPI
NUMBER [LOGO] SHARES
46 -571.2-
MISSISSIPPI-34 CELLULAR CORPORATION
AUTHORIZED TO ISSUE 100,000 SHARES-PAR VALUE $.01 PER SHARE
This Certifies that William M. Mounger II is the registered holder of Five
Hundred Seventy-One and 2/10 Shares of the capital stock of the above named
corporation, fully paid and non-assessable, transferable only on the books of
the Corporation by the holder hereof in person or by Attorney upon surrender of
this Certificate properly endorsed.
In Witness Whereof, the said Corporation has caused this Certificate to be
signed by its duly authorized officers and its Corporate Seal to be hereunto
affixed this 20th day of November A.D. 1992
[SEAL]
/s/ WILLIAM M. MOUNGER II /s/ WILLIAM M. YANDELL III
- ------------------------------ ------------------------------
SECRETARY PRESIDENT
WILLIAM M. MOUNGER II WILLIAM M. YANDELL III
<PAGE> 23
INCORPORATED UNDER THE LAWS OF THE STATE OF MISSISSIPPI
NUMBER [LOGO] SHARES
52 180
MISSISSIPPI-34 CELLULAR CORPORATION
AUTHORIZED TO ISSUE 100,000 SHARES-PAR VALUE $.01 PER SHARE
This Certifies that James A. Murrell III is the registered holder of One
Hundred Eighty Shares of the capital stock of the above named corporation,
fully paid and non-assessable, transferable only on the books of the
Corporation by the holder hereof in person or by Attorney upon surrender of
this Certificate properly endorsed.
In Witness Whereof, the said Corporation has caused this Certificate to be
signed by its duly authorized officers and its Corporate Seal to be hereunto
affixed this 20th day of November A.D. 1992
[SEAL]
/s/ WILLIAM M. MOUNGER II /s/ WILLIAM M. YANDELL III
- ------------------------------ ------------------------------
SECRETARY PRESIDENT
WILLIAM M. MOUNGER II WILLIAM M. YANDELL III
<PAGE> 24
INCORPORATED UNDER THE LAWS OF THE STATE OF MISSISSIPPI
NUMBER [LOGO] SHARES
42 571.2
MISSISSIPPI-34 CELLULAR CORPORATION
AUTHORIZED TO ISSUE 100,000 SHARES-PAR VALUE $.01 PER SHARE
This Certifies that William M. Yandell III is the registered holder of Five
Hundred Seventy-one and 2/10 Shares of the capital stock of the above named
corporation, fully paid and non-assessable, transferable only on the books of
the Corporation by the holder hereof in person or by Attorney upon surrender of
this Certificate properly endorsed.
In Witness Whereof, the said Corporation has caused this Certificate to be
signed by its duly authorized officers and its Corporate Seal to be hereunto
affixed this 20th day of November A.D. 1992
[SEAL]
/s/ WILLIAM M. MOUNGER II /s/ WILLIAM M. YANDELL III
- ------------------------------ ------------------------------
SECRETARY PRESIDENT
WILLIAM M. MOUNGER II WILLIAM M. YANDELL III
<PAGE> 25
INCORPORATED UNDER THE LAWS OF THE STATE OF MISSISSIPPI
NUMBER [LOGO] SHARES
44 571.2
MISSISSIPPI-34 CELLULAR CORPORATION
AUTHORIZED TO ISSUE 100,000 SHARES-PAR VALUE $.01 PER SHARE
This Certifies that Wirt A. Yerger III is the registered holder of Five Hundred
Seventy-one and 2/10 Shares of the capital stock of the above named
corporation, fully paid and non-assessable, transferable only on the books of
the Corporation by the holder hereof in person or by Attorney upon surrender of
this Certificate properly endorsed.
In Witness Whereof, the said Corporation has caused this Certificate to be
signed by its duly authorized officers and its Corporate Seal to be hereunto
affixed this 20th day of November A.D. 1992
[SEAL]
/s/ WILLIAM M. MOUNGER II /s/ WILLIAM M. YANDELL III
- ------------------------------ ------------------------------
SECRETARY PRESIDENT
WILLIAM M. MOUNGER II WILLIAM M. YANDELL III
<PAGE> 26
STOCK POWER
FOR VALUE RECEIVED, the undersigned does hereby sell, assign and
transfer to ______________________________________________________________
162 Shares of Capital Stock of Mississippi-34 Cellular Corporation, a
Mississippi corporation, represented by Certificate No. 40 (the "Stock"),
standing in the name of the undersigned on the books of said corporation and
does hereby irrevocably constitute and appoint _________________________ as the
undersigned's true and lawful attorney, for it and in its name and stead, to
sell, assign and transfer all or any of the Stock, and for that purpose to make
and execute all necessary acts of assignment and transfer thereof; and to
substitute one or more persons with like full power, hereby ratifying and
confirming all that said attorney or substitute or substitutes shall lawfully
do by virtue hereof.
Dated:
-----------------------
Mercury, Inc.
By: /s/ WILLIAM L. HENNING, JR.
---------------------------
William L. Henning, Jr.
President
<PAGE> 27
STOCK POWER
FOR VALUE RECEIVED, the undersigned does hereby sell, assign and
transfer to ___________________________________________________________________
3,625 Shares of Capital Stock of Mississippi-34 Cellular Corporation, a
Mississippi corporation, represented by Certificate No. 39 (the "Stock"),
standing in the name of the undersigned on the books of said corporation and
does hereby irrevocably constitute and appoint ______________________ as the
undersigned's true and lawful attorney, for it and in its name and stead, to
sell, assign and transfer all or any of the Stock, and for that purpose to make
and execute all necessary acts of assignment and transfer thereof; and to
substitute one or more persons with like full power, hereby ratifying and
confirming all that said attorney or substitute or substitutes shall lawfully
do by virtue hereof.
Dated:
--------------------------
Mercury, Inc.
By: /s/ WILLIAM L. HENNING, JR.
---------------------------
William L. Henning, Jr.
President
<PAGE> 28
STOCK POWER
FOR VALUE RECEIVED, the undersigned does hereby sell, assign and
transfer to _______________________________________________________________
1,313 Shares of Capital Stock of Mississippi-34 Cellular Corporation, a
Mississippi corporation, represented by Certificate No. 53 (the "Stock"),
standing in the name of the undersigned on the books of said corporation and
does hereby irrevocably constitute and appoint _____________________ as the
undersigned's true and lawful attorney, for it and in its name and stead, to
sell, assign and transfer all or any of the Stock, and for that purpose to make
and execute all necessary acts of assignment and transfer thereof; and to
substitute one or more persons with like full power, hereby ratifying and
confirming all that said attorney or substitute or substitutes shall lawfully
do by virtue hereof.
Dated:
------------------------
Mercury, Inc.
By: /s/ WILLIAM L. HENNING, JR.
---------------------------
William L. Henning, Jr.
President
<PAGE> 29
STOCK POWER
FOR VALUE RECEIVED, the undersigned does hereby sell, assign and
transfer to ___________________________________________________________________
2,500 Shares of Capital Stock of Mississippi-34 Cellular Corporation, a
Mississippi corporation, represented by Certificate No. 13 (the "Stock"),
standing in the name of the undersigned on the books of said corporation and
does hereby irrevocably constitute and appoint _______________________ as the
undersigned's true and lawful attorney, for it and in its name and stead, to
sell, assign and transfer all or any of the Stock, and for that purpose to make
and execute all necessary acts of assignment and transfer thereof; and to
substitute one or more persons with like full power, hereby ratifying and
confirming all that said attorney or substitute or substitutes shall lawfully
do by virtue hereof.
Dated:
-------------------------------
/s/ DAVID A. BAILEY
-------------------
David A. Bailey
<PAGE> 30
STOCK POWER
FOR VALUE RECEIVED, the undersigned does hereby sell, assign and
transfer to ___________________________________________________________________
180 Shares of Capital Stock of Mississippi-34 Cellular Corporation, a
Mississippi corporation, represented by Certificate No. 50 (the "Stock"),
standing in the name of the undersigned on the books of said corporation and
does hereby irrevocably constitute and appoint _______________________ as the
undersigned's true and lawful attorney, for it and in its name and stead, to
sell, assign and transfer all or any of the Stock, and for that purpose to make
and execute all necessary acts of assignment and transfer thereof; and to
substitute one or more persons with like full power, hereby ratifying and
confirming all that said attorney or substitute or substitutes shall lawfully
do by virtue hereof.
Dated:
-------------------------------
/s/ E. B. MARTIN, JR.
---------------------
E. B. Martin, Jr.
<PAGE> 31
STOCK POWER
FOR VALUE RECEIVED, the undersigned does hereby sell, assign and
transfer to ___________________________________________________________________
326.4 Shares of Capital Stock of Mississippi-34 Cellular Corporation, a
Mississippi corporation, represented by Certificate No. 48 (the "Stock"),
standing in the name of the undersigned on the books of said corporation and
does hereby irrevocably constitute and appoint ______________________ as the
undersigned's true and lawful attorney, for it and in its name and stead, to
sell, assign and transfer all or any of the Stock, and for that purpose to make
and execute all necessary acts of assignment and transfer thereof; and to
substitute one or more persons with like full power, hereby ratifying and
confirming all that said attorney or substitute or substitutes shall lawfully
do by virtue hereof.
Dated:
---------------------------
/s/ ROBERT G. MOUNGER
---------------------
Robert G. Mounger
<PAGE> 32
STOCK POWER
FOR VALUE RECEIVED, the undersigned does hereby sell, assign and
transfer to _________________________________________________________________
571.2 Shares of Capital Stock of Mississippi-34 Cellular Corporation, a
Mississippi corporation, represented by Certificate No. 46 (the "Stock"),
standing in the name of the undersigned on the books of said corporation and
does hereby irrevocably constitute and appoint _______________________ as the
undersigned's true and lawful attorney, for it and in its name and stead, to
sell, assign and transfer all or any of the Stock, and for that purpose to make
and execute all necessary acts of assignment and transfer thereof; and to
substitute one or more persons with like full power, hereby ratifying and
confirming all that said attorney or substitute or substitutes shall lawfully do
by virtue hereof.
Dated:
----------------------------
/s/ WILLIAM M. MOUNGER II
-------------------------
William M. Mounger II
<PAGE> 33
STOCK POWER
FOR VALUE RECEIVED, me undersigned does hereby sell, assign and
transfer to__________________________________________________________________
180 Shares of Capital Stock of Mississippi-34 Cellular Corporation, a
Mississippi corporation, represented by Certificate No. 52 (the "Stock"),
standing in the name of the undersigned on the books of said corporation and
does hereby irrevocably constitute and appoint _______________________ as the
undersigned's true and lawful attorney, for it and in its name and stead, to
sell, assign and transfer all or any of the Stock, and for that purpose to make
and execute all necessary acts of assignment and transfer thereof; and to
substitute one or more persons with like full power, hereby ratifying and
confirming all that said attorney or substitute or substitutes shall lawfully do
by virtue hereof.
Dated:
---------------------------------
/s/ JAMES A. MURRELL, III
-------------------------
James A. Murrell, III
<PAGE> 34
STOCK POWER
FOR VALUE RECEIVED, me undersigned does hereby sell, assign and transfer
to ______________________________________________________________________ 571.2
Shares of Capital Stock of Mississippi-34 Cellular Corporation, a Mississippi
corporation represented by Certificate No. 42 (the "Stock"), standing in the
name of the undersigned on the books of said corporation and does hereby
irrevocably constitute and appoint _______________________ as the undersigned's
true and lawful attorney, for it and in its name and stead, to sell, assign and
transfer all or any of the Stock, and for that purpose to make and execute all
necessary acts of assignment and transfer thereof: and to substitute one or
more persons with like full power, hereby ratifying and confirming all that
said attorney or substitute or substitutes shall lawfully do by virtue hereof.
Dated:
-----------------------------
/s/ WILLIAM M. YANDELL III
--------------------------
William M. Yandell III
<PAGE> 35
STOCK POWER
FOR VALUE RECEIVED, the undersigned does hereby sell, assign and
transfer to ____________________________________________________________
571.2 Shares of Capital Stock of Mississippi-34 Cellular Corporation, a
Mississippi corporation, represented by Certificate No. 44 (the "Stock"),
standing in the name of the undersigned on the books of said corporation and
does hereby irrevocably constitute and appoint _______________________ as the
undersigned's true and lawful attorney, for it and in its name and stead, to
sell, assign and transfer all or any of the Stock, and for that purpose to make
and execute all necessary acts of assignment and transfer thereof; and to
substitute one or more persons with like full power, hereby ratifying and
confirming all that said attorney or substitute or substitutes shall lawfully
do by virtue hereof.
Dated:
-------------------------------------
/s/ WIRT A. YERGER III
----------------------
Wirt A. Yerger III
<PAGE> 36
EXHIBIT A
to
PLEDGE AGREEMENT
dated as of December 20, 1993
Pledged Stock Certificates
<TABLE>
<CAPTION>
Percentage of Shares of Capital
Issued and Outstanding Stock owned by
Capital Stock owned each Pledgor Subject
Name by each Pledgor to Pledge
<S> <C> <C>
Mercury, Inc. 51% 5,100
David Bailey 25% 2,500
E. B. Martin, Jr. 1.8% 180
Robert Mounger 3.3% 326.4
William M. Mounger, II 5.7% 571.2
James Murrell 1.8% 180
William M. Yandell, III 5.7% 571.2
Wirt A. Yerger, III 5.7% 571.2
</TABLE>
<PAGE> 1
EXHIBIT 4.45
CAPITAL NOTE
$1,684,987.01
PARSIPPANY, NEW JERSEY
December 30, 1993
FOR VALUE RECEIVED, the undersigned, MISSISSIPPI-34 CELLULAR
CORPORATION, a Mississippi corporation (the "Borrower"), hereby unconditionally
promises to pay to the order of AT&T CREDIT CORPORATION, a Delaware corporation
(the "Lender"), at its offices at 2 Gatehall Drive, Parsippany, New Jersey
07054, or at such other place as the holder of this Capital Note may from time
to time designate in writing, in lawful money of the United States of America
and in immediately available funds, the principal sum of One Million Six
Hundred Eighty Four Thousand Nine Hundred Eighty Seven and 01/100
($1,684,987.01), together with interest on the principal balance remaining from
time to time unpaid at the rate provided below from the date such principal is
advanced until payment in full thereof. This Capital Note is referred to in and
was executed and delivered pursuant to Section 2.04 of that certain Loan and
Security Agreement dated as of December 30, 1993 by and between the Borrower
and the Lender (the "Loan Agreement"), to which reference is hereby made for a
statement of terms and conditions under which the Capital Loans evidenced
hereby are being made and are to be repaid. All terms which are capitalized and
used herein (which are not otherwise specifically defined herein) and which are
defined in the Loan Agreement shall be used in this Capital Note as defined in
the Loan Agreement.
The principal indebtedness evidenced hereby shall be payable in
twenty-two (22) consecutive quarterly installments, as set forth on Schedule A
attached hereto. The principal amount hereof may be prepaid only in accordance
with the terms of the Loan Agreement.
Borrower further promises to pay interest on the outstanding unpaid
principal amount hereof which remains unpaid from the date hereof until payment
in full hereof at the per annum rate equal to 6.38%, payable quarterly in
arrears on the Payment Dates and subject to capitalization of the interest
payable prior to the Commitment Termination Date in accordance with the
provisions of Section 2.05 of the Loan Agreement, and calculated on the basis
of a 360-day year comprised of twelve 30 day months, compounded monthly;
provided, however that if Borrower shall default in the payment of the
principal or interest hereof, the Borrower promises to, on demand, pay interest
on the entire unpaid principal amount hereof at a rate equal to four percent
(4%) per annum above the rate of interest that would otherwise be applicable,
from the date such payment is due to the date of actual payment, and if any
other Event of Default occurs and is continuing, the Borrower promises to, on
demand, pay interest on the entire unpaid principal amount hereof at a rate
equal to two percent (2%) per annum above the rate of interest that would
otherwise be applicable until such Event of Default is cured.
If payment hereunder becomes due and payable on a Saturday, Sunday, or
legal holiday, under the laws of the State of New Jersey, the due date thereof
shall be extended to the next succeeding Business Day, and interest shall be
payable thereon during such extension at the rate specified above. Checks,
drafts or similar items of payment received by the Lender shall not
<PAGE> 2
constitute payment until the same is honored by the Lender's depository bank,
and final settlement thereof is reflected by irrevocable credit to the lender's
account in such bank, BUT SOLELY FOR THE PURPOSE OF COMPUTING INTEREST EARNED
BY THE LENDER, CREDIT SHALL BE GIVEN TO THE BORROWER ON THE BUSINESS DAY SUCH
ITEM OR PAYMENT IS RECEIVED BY THE LENDER. In no contingency or event
whatsoever shall interest charged hereunder, however such interest may be
characterized or computed, exceed the highest rate permissible under any law
which a court of competent jurisdiction shall, in a final determination, deem
applicable hereto. In the event that such a court determines that the Lender
has received interest hereunder in excess of the highest rate applicable
hereto, the Lender shall promptly refund such excess interest to Borrower.
Except as otherwise agreed in the Loan Agreement, payments received by
the Lender from the Borrower on this Capital Note shall be applied first to the
payment of interest which is due and payable and only thereafter to the
outstanding principal balance.
Presentment, protest and notice of nonpayment are hereby waived by the
Borrower.
This Capital Note shall be interpreted and the rights and liabilities of
the parties hereto determined in accordance with the internal laws (as opposed
to conflicts of law provisions) and decisions of the State of New Jersey.
Whenever possible each provision of this Capital Note shall be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Capital Note shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Capital Note. whenever in this Capital Note
reference is made to the Lender or Borrower, such reference is made to include,
as applicable, a reference to their respective successors and assigns. The
provisions of this Capital Note shall be binding upon and inure to the benefit
of said successors and assigns. Borrower's successors and assigns shall
include, without limitation, a receiver, trustee or debtor in possession of or
for the Borrower.
MISSISSIPPI-34 CELLULAR
CORPORATION
By: /s/ [ILLEGIBLE]
------------------------------------
Its: President
------------------------------------
<PAGE> 3
PAYMENT SCHEDULE
DATED AS OF DECEMBER 30, 1993
<TABLE>
<CAPTION>
BEG. PRINCIPAL PRINCIPAL PRINCIPAL ENDING PRINCIPAL
QUARTER BALANCE REPYMT % AMORTIZATION BALANCE INTEREST TOTAL PAYMENT
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1,684,987.01
1 1,684,987.01 1,712,612.51 27,625.50 0.00
2 1,712,612.51 1,740,074.17 27,461.66 0.00
3 1,740,074.17 1,767,976.17 27,902.00 0.00
4 1,767,976.17 1,796,325.58 28,349.41 0.00
5 1,796,325.58 1,825,129.57 28,803.99 0.00
6 1,825,129.57 1,854,395.43 29,265.86 0.00
7 1,854,395.43 1,884,130.57 29,735.14 0.00
8 1,884,130.57 1,914,342.51 30,211.94 0.00
9 1,914,342.51 1,945,038.90 30,696.39 0.00
10 1,945,038.90 1,976,227.50 31,188.60 0.00
11 1,976,227.50 2,007,916.21 31,688.71 0.00
12 2,007,916.21 2,040,113.05 32,196.84 0.00
13 2,040,113.05 2,072,826.16 32,713.11 0.00
14 2,072,826.16 2,106,063.83 33,237.67 0.00
15 2,106,063.83 1.00% 21,060.64 2,085,003.19 33,770.63 54,831.27
16 2,085,003.19 1.00% 21,060.64 2,063,942.55 33,432.92 54,493.56
17 2,063,942.55 1.90% 40,015.21 2,023,927.34 33,095.22 73,110.43
18 2,023,927.34 1.90% 40,015.21 1,983,912.13 32,453.58 72,468.79
19 1,983,912.13 1.90% 40,015.21 1,943,896.92 31,811.93 71,827.15
20 1,943,896.92 1.90% 40,015.21 1,903,881.70 31,170.29 71,185.50
21 1,903,881.70 3.75% 78,977.39 1,824,904.31 30,528.65 109,506.04
22 1,824,904.31 3.75% 78,977.39 1,745,926.92 29,262.25 108,239.65
23 1,745,926.92 3.75% 78,977.39 1,666,949.52 27,995.85 106,973.25
24 1,666,949.52 3.75% 78,977.39 1,587,972.13 26,729.45 105,706.85
25 1,587,972.13 4.75% 100,038.03 1,487,934.10 25,463.06 125,501.09
26 1,487,934.10 4.75% 100,038.03 1,387,896.06 23,858.95 123,896.98
27 1,387,896.06 4.75% 100,038.03 1,287,858.03 22,254.85 122,292.88
28 1,287,858.03 4.75% 100,038.03 1,187,820.00 20,650.74 120,688.77
29 l,187,820.00 6.00% 126,363.83 1,061,456.17 19,046.64 145,410.47
30 1,061,456.17 6.00% 126,363.83 935,092.34 17,020.40 143,384.23
31 935,092.34 6.00% 126,363.83 808,728.51 14,994.16 141,357.99
32 808,728.51 6.00% 126,363.83 682,364.68 12,967.92 139,331.75
33 682,364.68 8.10% 170,591.17 511,773.51 10,941.68 181,532.85
34 511,773.51 8.10% 170,591.17 341,182.34 8,206.26 178,797.43
35 341,182.34 8.10% 170,591.17 170,591.17 5,470.84 176,062.01
36 170,591.17 8.10% 170,591.17 0.00 2,735.42 173,326.59
</TABLE>
<PAGE> 4
NOTICE OF BORROWING
IN RESPECT OF CAPITAL LOANS
TO: AT&T Credit Corporation
DATED: December 28, 1993
Gentlemen:
The undersigned, Mississippi-34 Cellular Corporation (the "Borrower"),
refers to that certain Loan and Security Agreement dated as of December 20,
1993 (the "Loan Agreement", the terms defined therein used herein as therein
defined) between AT&T Credit Corporation (the "under") and the Borrower, and
hereby gives the under notice, irrevocably, pursuant to Section 2.03(b) of the
Loan Agreement that the undersigned hereby requests a Capital Loan under the
Loan Agreement, and in that connection sets forth below the information
relating to such Capital Loan (the "Proposed Loan") as required by Section
2.03(b) of the loan Agreement:
(i) The Business Day of the Proposed Loan is December 30, 1993;
(ii) The proceeds of the Proposed Loan are to be used for the
purposes as specified on Schedule A attached hereto:
(iii) The bank account into which the proceeds of the Proposed Loan
are to be transferred is account no. 01-095366-01 maintained at Calcasieu Marine
National Bank.
(iv) The ABA number of the above referenced bank is 065200188, and
the name and address, phone and fax numbers of the contact person at such bank,
are as follows:
Calcasieu Marine National Bank
Attn: Keren Viator
One Lakeshore Drive
Lake Charles, LA 70629
Telephone Number: 318-494-3411
Fax Number: 318-494-3401
(v) The aggregate amount of the Proposed Loan is $3,823,737.29;
and
<PAGE> 5
(vi) The Proposed Loan is to bear interest at the Variable Rate
<TABLE>
<S> <C>
AT&T 6.13
NON AT&T 6.38
</TABLE>
The undersigned hereby certifies that the following statements are
true on the Business Day of the Proposed Loan:
(A) The representations and warranties contained in Article III
of the Loan Agreement and contained in the other Loan Documents are correct in
all material respect, before and after giving effect to the Proposed Loan and
to the application of the proceeds therefrom, as though made on as of
such date;
(B) No event has occurred and is continuing, or would result from
such Proposed Loan or from the application of the proceeds therefrom, which
constitutes either an Event of Default or an event which but for the
requirement that notice be given and/or the elapse of time, would constitute
an Event of Default; and
(C) All agreements and all conditions to the Proposed Loan,
contained in the Loan agreement or any other of the loan Documents which are
required to be performed or satisfied by the Borrower on the date hereof or by
the Business Day of the Proposed Loan have been and will be performed and
satisfied.
The undersigned hereby certifies that in accordance with
Section 6.02 of the Loan Agreement the proceeds of the Proposed Loan shall be
used only for purposes specifically described in the Business Plan.
Very truly yours,
Mississippi-34 Cellular Corporation
/s/ ROBERT PIPER
By: Robert Piper
Its: Secretary/Treasurer
<PAGE> 6
12/29/93
8:57 AM
SCHEDULE A
DRAWDOWN NEEDED AT
EXECUTION OF LOAN DOCUMENT
<TABLE>
<S> <C> <C> <C>
AT& T EQUIPMENT:
Grenada Cell
Indianola Cell
Cleveland Cell
Oakland Cell 1,005,411
IMS 949,249
Engineering 39,500
Transportation/Tax 144,676
-------
2,138,836
AT&T FINANCE:
Origination Fee 124,753
-------
124,753
-------
TOTAL AT&T DRAW: 2,263,589
=========
NON AT&T:
Cell Site Engineering 827,476
Buildings 242,500
Working Capital 490,172
-------
TOTAL NON AT&T DRAW: 1,560,148
=========
</TABLE>
Page 1
<PAGE> 1
EXHIBIT 4.46
[CHANCERY CLERK HOLMES COUNTY, MS STAMP]
Mississippi
DEED OF TRUST, SECURITY
AGREEMENT, FINANCING STATEMENT AND
ASSIGNMENT OF RENTS AND LEASES
[FILING STAMP - STATE OF MISSISSIPPI]
THIS DEED OF TRUST, SECURITY AGREEMENT, FINANCING STATEMENT AND ASSIGNMENT
OF RENTS AND LEASES ("Deed of Trust") entered into as of the 20th day of
December, 1993 by MISSISSIPPI-34 CELLULAR CORPORATION, a Mississippi
corporation (hereinafter called "Grantor"), having a place of business at 1647
Deposit Guaranty Building, Jackson Mississippi 39211 to LOUIS B. FONTANA, JR.,
having an address at 44 Whippany Road, Morristown, New Jersey, 07962 ("Trustee")
for the benefit of AT&T CREDIT CORPORATION, a Delaware corporation with an
office located at 2 Gatehall Drive, Parsippany, New Jersey 07054-0827
("Beneficiary"). Except as otherwise provided herein, all capitalized terms
used but not defined herein shall have the respective meanings given to them in
the Loan Agreement (as hereinafter defined).
WITNESSETH:
WHEREAS, Grantor and Beneficiary have entered into a certain Loan and
Security Agreement, dated as of December 20, 1993 (the Loan Agreement and any
and all renewals, extensions for any period, increases or rearrangements thereof
is referred to as the "Loan Agreement"), providing for the extension of credit
and certain other financial accommodations from time to time by Beneficiary to
Grantor in an aggregate amount not to exceed Nine Million Nine Hundred Eighty
Thousand and no/100 Dollars ($9,980,000.00); and
WHEREAS, pursuant to the provisions of the Loan Agreement, Grantor has
executed and delivered to Beneficiary (i) that certain Equipment Note, dated of
even date herewith, in the principal amount of Two Million One Hundred Thirty
Eight Thousand Eight Hundred Thirty Six and 03/100 Dollars ($2,138,836.03), and
(ii) that certain Capital Note, dated of even date herewith, in the principal
amount of One Million Six Hundred Eighty Four Thousand Nine Hundred Eighty
Seven and 01/100 Dollars ($1,684,987.01); and Grantor may hereafter from time
to time execute and deliver to Beneficiary additional Equipment
This document was prepared by
and after recording should be
returned to:
James L. Marovitz
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Telephone: (312) 853-7617
<PAGE> 2
Notes and Capital Notes, the total principal amount of which, when combined with
the Equipment Note and the Capital Note dated of even date herewith, will not
exceed Nine Million Nine Hundred Eighty Thousand and no/100 Dollars
($9,980,000.00) (the Equipment Notes and the Capital Notes and any and all
renewals, extensions for any period, increases, consolidations or
rearrangements thereof are jointly hereinafter referred to as the "Note"); and
WHEREAS, as a condition to Beneficiary's extension of certain financial
accommodations to Grantor including, without limitation, the extension of credit
evidenced by the Note and pursuant to the Loan Agreement, Beneficiary has
required that Grantor enter into this Deed of Trust and grant to Beneficiary
the liens and security interests referred to herein to secure (i) the payment
of the principal amount evidenced by the Note together with interest thereon;
(ii) payment of the principal amount, together with interest thereon, of all
present and future advances of money made by Beneficiary to Grantor, as well as
all other Obligations (all as defined and provided in the Loan Agreement) of
Grantor to Beneficiary; and (iii) other payment and performance obligations
related to this Deed of Trust (the aforesaid Obligations of Grantor to
Beneficiary, together with the obligations evidenced by the Note plus interest
and other payment and performance obligations being hereinafter referred to
collectively as the "Liabilities"); and
WHEREAS, the Liabilities secured hereby shall not exceed an aggregate
principal amount, at any one time oustanding of Fifteen Million and no/100
Dollars ($15,000,000.00), provided, that the foregoing limitation shall apply
only to the lien upon the real property created by this Deed of Trust, and it
shall not in any manner limit, affect or impair any grant of a security
interest or other right in favor of the Beneficiary under the provisions of the
Loan Agreement or under any other security agreement at any time executed by
Grantor;
NOW, THEREFORE, in consideration of the premises contained herein and to
secure payment of the Liabilities and in consideration of One Dollar ($1.00) in
hand paid, receipt whereof is hereby acknowledged, Grantor does hereby
irrevocably grant, bargain, sell, remise, release, alien, convey, confirm
mortgage and warrant to Trustee, IN TRUST, WITH POWER OF SALE, its successors
and assigns, the following described real estate (the "Land") in Holmes
County, Mississippi, and does further grant a security interest to Beneficiary,
its successors and assigns, in all Personal Property (as defined below) as well
as all Mortgaged Property (as defined below) as may be secured under the
Uniform Commercial Code (the "Code") in effect in the State of Mississippi (the
"State"):
See Exhibit A attached hereto and by this reference made a part hereof for
the legal description of the Land
-2-
<PAGE> 3
which Land, together with all right, title and interest, if any, which Grantor
may now have or hereafter acquire in and to all improvements, buildings and
structures thereon of every nature whatsoever, is herein called the "Premises."
TOGETHER WITH all right, title and interest, if any, including
any after-acquired right, title and interest, and including any right of use or
occupancy, which Grantor may now have or hereafter acquire in and to (a) all
easements, rights of way, gores of land or any lands occupied by streets, ways,
alleys, passages, sewer rights, water courses, water rights and powers, and
public places adjoining said Land, and any other interests in property
constituting appurtenances to the Premises, or which hereafter shall in any way
belong, relate or be appurtenant thereto, and (b) all hereditaments, gas, oil,
minerals (with the right to extract, sever and remove such gas, oil and
minerals), and easements, of every nature whatsoever, located in or on the
Premises and all other rights and privileges thereunto belonging or
appertaining and all extensions, additions, improvements, betterments,
renewals, substitutions and replacements to or of any of the rights and
interests described in subparagraphs (a) and (b) above (hereinafter the
"Property Rights").
TOGETHER WITH all right, title and interest, if any, including any
after-acquired right, title and interest, and including any right of use or
occupancy, which Grantor may now or hereafter acquire in and to all fixtures
and appurtenances of every nature whatsoever now or hereafter located in, on or
attached to, and used or intended to be used in connection with, or with the
operation of, the Premises, including, but not limited to (a) all apparatus,
machinery and equipment of Grantor and (b) all extensions, additions,
improvements, betterments, renewals, substitutions and replacements to or of
any of the foregoing (the items described in the foregoing clauses (a) and (b)
being the "Fixtures"); as well as all personal property and equipment of every
nature whatsoever now or hereafter located in or on the Premises, including but
not limited to (c) accounts, contract rights, general intangibles, tax refunds,
chattel paper, instruments, notes, letters of credit, documents, documents of
title; (d) inventory; (e) equipment; (f) all of Grantor's deposit accounts
(general or special) with and credits and other claims against Beneficiary, or
any other financial institution with which Grantor maintains deposits; (g) all
of Grantor's now owned or hereafter acquired monies, and any and all other
property and interests in property of Grantor now or hereafter coming into the
actual possession, custody or control of Beneficiary or any agent or affiliate
of Beneficiary in any way or for any purpose (whether for safekeeping, deposit,
custody, pledge, transmission, collection or otherwise); (h) all insurance
proceeds of or relating to any of the foregoing; (i) all insurance proceeds
relating to any key man life insurance policy covering the life of any officer
or director of Grantor; (j) all of Grantor's books and records relating to any
of the foregoing; and (k) all
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<PAGE> 4
accessions and additions to, substitutions for, and replacements, products and
proceeds of any of the foregoing clauses (c) through (j) (the items described
in the foregoing clauses (c) through (k) and any other personal property
referred to in this paragraph being the "Personal Property"). It is mutually
agreed, intended and declared that the Premises and all of the Property Rights
and Fixtures owned by Grantor (referred to collectively herein as the "Real
Property") shall, so far as permitted by law, be deemed to form a part and
parcel of the Land and for the purpose of this Deed of Trust to be real estate
and covered by this Deed of Trust. It is also agreed that if any of the
property herein mortgaged is of a nature so that a security interest therein
can be perfected under the Code in effect in the State, this instrument shall
constitute a security agreement, fixture filing and financing statement, and
Grantor agrees to execute, deliver and file or refile any financing statement,
continuation statement, or other instruments Beneficiary may reasonably require
from time to time to perfect or renew such security interest under the Code. To
the extent permitted by law, (i) all of the Fixtures are or are to become
fixtures on the Land and (ii) this instrument, upon recording or registration
in the real estate records of the proper office, shall constitute a
"fixture-filing" within the meaning of Sections 9-313 and 9-402 of the Code.
Subject to the terms and conditions of the Loan Agreement, the remedies for any
violation of the covenants, terms and conditions of the agreements herein
contained shall be as prescribed herein or by general law, or, as to that part
of the security in which a security interest may be perfected under the Code,
by the specific statutory consequences now or hereafter enacted and specified
in the Code, all at Beneficiary's sole election.
TOGETHER WITH all the estate, right, title and interest of the Grantor
in and to (i) all judgments, insurance proceeds, awards of damages and
settlements resulting from condemnation proceedings or the taking of the Real
Property, or any part thereof, under the power of eminent domain or for any
damage (whether caused by such taking or otherwise) to the Real Property, or
any part thereof, or to any rights appurtenant thereto, and all proceeds of any
sales or other dispositions of the Real Property or any part thereof; and
(except as otherwise provided herein or in the Loan Agreement) the Beneficiary
is hereby authorized to collect and receive said awards and proceeds and to
give proper receipts and acquittances therefor, and to apply the same as
provided in the Loan Agreement; and (ii) all contract rights, general
intangibles, actions and rights in action relating to the Real Property or the
Personal Property including, without limitation, all rights to insurance
proceeds and unearned premiums arising from or relating to damage to the Real
Property or the Personal Property; and (iii) all proceeds, products,
replacements, additions, substitutions, renewals and accessions of and to the
Real Property and the Personal Property. (The rights and interests described in
this paragraph shall hereinafter be called the "Intangibles".)
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<PAGE> 5
As additional security for the Liabilities secured hereby, Grantor (i)
does hereby pledge and assign to Beneficiary from and after the date hereof
(including any period of redemption), primarily and on a parity with the Real
Property, and not secondarily, all the rents, issues and profits of the Real
Property and all rents, issues, profits, revenues, royalties, bonuses, rights
and benefits due, payable or accruing (including all deposits of money as
advance rent, for security or as earnest money or as down payment for the
purchase of all or any part of the Real Property) (the "Rents") under any and
all present and future leases, contracts or other agreements relative to the
ownership or occupancy of all or any portion of the Real Property, and (ii)
except to the extent such a transfer or assignment is not permitted by the
terms thereof, does hereby transfer and assign to Beneficiary all such leases
and agreements (including all Grantor's rights under any contracts for the sale
of any portion of the Mortgaged Property and all revenues and royalties under
any oil, gas and mineral leases relating to the Real Property) (the "Leases").
Beneficiary hereby grants to Grantor the right to collect and use the Rents as
they become due and payable under the Leases, but not more than one (1) month
in advance thereof, unless an Event of Default shall have occurred provided
that the existence of such right shall not operate to subordinate this
assignment to any subsequent assignment, in whole or in part, by Grantor, and
any such subsequent assignment shall be subject to the rights of the
Beneficiary under this Deed of Trust. Grantor further agrees to execute and
deliver such assignments of leases or assignments of land sale contracts as
Beneficiary may from time to time request. In the event of an Event of Default
(1) the Grantor agrees, upon demand, to deliver to the Beneficiary all of the
Leases with such additional assignments thereof as the Beneficiary may request
and agrees that the Beneficiary may assume the management of the Real Property
and collect the Rents, applying the same upon the Liabilities in the manner
provided in the Loan Agreement, and (2) the Grantor hereby authorizes and
directs all tenants, purchasers or other persons occupying or otherwise
acquiring any interest in any part of the Real Property to pay the Rents due
under the Leases to the Beneficiary upon request of the Beneficiary. Grantor
hereby appoints Beneficiary as its true and lawful attorney in fact to manage
said property and collect the Rents, with full power to bring suit for
collection of the Rents and possession of the Real Property, giving and
granting unto said Beneficiary and unto its agent or attorney full power and
authority to do and perform all and every act and thing whatsoever requisite
and necessary to be done in the protection of the security hereby conveyed;
provided, however, that (i) this power of attorney and assignment of rents
shall not be construed as an obligation upon said Beneficiary to make or cause
to be made any repairs that may be needful or necessary and (ii) Beneficiary
agrees that until such Event of Default as aforesaid, Beneficiary shall permit
Grantor to perform the aforementioned management responsibilities. Upon
Beneficiary's receipt of the Rents, at Beneficiary's option, it
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<PAGE> 6
may use the proceeds of the Rents to pay: (1) reasonable charges for collection
thereof, costs of necessary repairs and other costs requisite and necessary
during the continuance of this power of attorney and assignment of rents, (2)
general and special taxes, insurance premiums, and (3) any or all of the
Liabilities pursuant to the provisions of the Loan Agreement. This power of
attorney and assignment of rents shall be irrevocable until this Deed of Trust
shall have been satisfied and released of record and the releasing of this Deed
of Trust shall act as a revocation of this power of attorney and assignment of
rents. Beneficiary shall have and hereby expressly reserves the right and
privilege (but assumes no obligation) to demand, collect, sue for, receive and
recover the Rents, or any part thereof, now existing or hereafter made, and
apply the same in accordance with the provisions of the Loan Agreement.
All of the property described above, and each item of property therein
described, not limited to but including the Land, the Premises, the Property
Rights, the Fixtures, the Personal Property, the Real Property, the
Intangibles, the Rents and the Leases, is herein referred to as the "Mortgaged
Property."
Nothing herein contained shall be construed as constituting the
Beneficiary a mortgagee-in-possession in the absence of the taking of actual
possession of the Mortgaged Property by the Beneficiary. Nothing contained in
this Deed of Trust shall be construed as imposing on Trustee or Beneficiary any
of the obligations of the lessor under any Lease of the Mortgaged Property in
the absence of an explicit assumption thereof by Trustee or Beneficiary. In the
exercise of the powers herein granted the Beneficiary, except as provided in
the Loan Agreement, no liability shall be asserted or enforced against the
Trustee or Beneficiary, all such liability being expressly waived and released
by Grantor.
TO HAVE AND TO HOLD the Mortgaged Property, properties, rights and
privileges hereby conveyed or assigned, or intended so to be, unto Beneficiary,
its beneficiaries, successors and assigns, forever for the uses and purposes
herein set forth. Grantor hereby releases and waives all rights under and by
virtue of the Homestead Exemption Laws, if any, of the State and Grantor hereby
covenants, represents and warrants that, at the time of the ensealing and
delivery of these presents, Grantor is well seized of the Mortgaged Property in
fee simple and with full legal and equitable title to the Mortgaged Property,
and with good right, full power and lawful authority to sell, assign, convey
and mortgage the Mortgaged Property, and that the title to the Mortgaged
Property described in Exhibit A attached hereto is free and clear of
encumbrances, except as described on Exhibit B attached hereto and made a part
hereof, and that, except for the encumbrances set forth on Exhibit B, Grantor
will forever defend the same against all lawful claims.
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<PAGE> 7
The following provisions shall also constitute an integral part of
this Deed of Trust:
1. Payment of Taxes on the Deed of Trust. Without limiting any of
the provisions of the Loan Agreement, Grantor agrees that, if the United States
or any department, agency or bureau thereof or if the State or any of its
subdivisions having jurisdiction shall at any time require documentary stamps
to be affixed to this Deed of Trust or shall levy, assess, or charge any tax,
assessment or imposition upon this Deed of Trust or the credit or indebtedness
secured hereby or the interest of Beneficiary in the Premises or upon
Beneficiary by reason of or as holder of any of the foregoing then, Grantor
shall pay for such documentary stamps in the required amount and deliver them
to Beneficiary or pay (or reimburse Beneficiary for) such taxes, assessments or
impositions. Grantor agrees to exhibit to Beneficiary, at any time upon
request, official receipts showing payment of all taxes, assessments and
charges which Grantor is required or elects to pay under this paragraph.
Grantor agrees to indemnify Beneficiary against liability on account of such
documentary stamps, taxes, assessments or impositions, whether such liability
arises before or after payment of the Liabilities and regardless of whether
this Deed of Trust shall have been released.
2. Leases Affecting the Real Property. Grantor agrees faithfully
to perform all of its obligations under all present and future Leases at any
time assigned to Beneficiary as additional security, and to refrain from any
action or inaction which would result in termination of any such Leases or in
the diminution of the value thereof or of the Rents due thereunder. All future
lessees under any Lease made after the date of recording of this Deed of Trust
shall, at Beneficiary's option and without any further documentation, attorn to
Beneficiary as lessor if for any reason Beneficiary becomes lessor thereunder,
and, upon demand, pay rent to Beneficiary, and Beneficiary shall not be
responsible under such lease for matters arising prior to Beneficiary becoming
lessor thereunder.
3. Use of the Real Property. Grantor agrees that it shall not
permit the public to use the Real Property in any manner that might tend, in
Beneficiary's reasonable judgment, to impair Grantor's title to such property
or any portion thereof, or to make possible any claim or claims of easement by
prescription or of implied dedication to public use.
4. Indemnification. Grantor shall not use or permit the use of
any part of the Real Property for an illegal purpose, including, without
limitation, the violation of any environmental laws, statutes, codes,
regulations or practices. Without limiting any indemnification Grantor has
granted in the Loan Agreement, Grantor agrees to indemnify and hold harmless
Beneficiary from and against any and all losses, suits, liabilities, fines,
damages, judgments, penalties, claims,
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<PAGE> 8
charges, costs and expenses (including reasonable attorneys' and paralegals'
fees, court costs and disbursements) which may be imposed on, incurred or paid
by or asserted against the Real Property by reason or on account of or in
connection with (i) the construction, reconstruction or alteration of the Real
Property, (ii) any negligence or misconduct of Grantor, any lessee of the Real
Property, or any of their respective agents, contractors, subcontractors,
servants, employees, licensees or invitees, (iii) any accident, injury, death
or damage to any person or property occurring in, on or about the Real Property
or any street, drive, sidewalk, curb or passageway adjacent thereto, or (iv)
any other transaction arising out of or in any way connected with the Mortgaged
Property (provided that Grantor shall have no obligation to Beneficiary under
this paragraph with respect to any indemnified matters caused by or resulting
from the willful misconduct or gross negligence of the Beneficiary).
5. Insurance. Grantor shall, at its sole expense, obtain for,
deliver to, assign and maintain for the benefit of Beneficiary, until the
Liabilities are paid in full, insurance policies as specified in the Loan
Agreement. In the event of a casualty loss, the net insurance proceeds from
such insurance policies shall be paid and applied as specified in the Loan
Agreement.
6. Condemnation Awards. Grantor hereby assigns to Beneficiary, as
additional security, all awards of damage resulting from condemnation
proceedings or the taking of or injury to the Real Property for public use, and
Grantor agrees that the proceeds of all such awards shall be paid and applied
as specified in the Loan Agreement.
7. Remedies. Subject to the provisions of the Loan Agreement,
upon the occurrence of an Event of Default under the terms of the Loan
Agreement, in addition to any rights and remedies provided for in the Loan
Agreement, and to the extent permitted by applicable law, the following
provisions shall apply:
(a) Beneficiary's Power of Enforcement. It shall be lawful for
Trustee, at the request of Beneficiary, to sell the Mortgaged Property or a
sufficiency thereof, to satisfy the Liabilities at public outcry to the highest
bidder for cash or on such other terms as Trustee may elect. Sale of the
Mortgaged Property shall be advertised for 3 consecutive weeks preceding the
sale in a newspaper published in the county where the Mortgaged Property is
situated, or if none is so published, then in some newspaper having a general
circulation therein, and by posting notice of sale for the same time at the
courthouse of the same county. The notice and advertisement shall disclose the
names of the original Grantor in this Deed of Trust. Grantor waives the
provisions of Section 89-1-55 of the Mississippi Code of 1972, as amended, if
any, as far as such section restricts the right of Trustee to offer at sale
more than 160 acres at a time,
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<PAGE> 9
and Trustee may offer the Mortgaged Property herein conveyed as a whole,
regardless of how it is described. If the Mortgaged Property is situated in two
or more counties, or in two judicial districts of the same county, Trustee
shall have full power to select in which county, or judicial district, the sale
of the Mortgaged Property is to be made, newspaper advertisement published and
notice of sale posted, and Trustee's selection shall be binding upon Grantor
and Beneficiary. Any officer of Beneficiary may declare Grantor to be in
default and request Trustee to sell the Mortgaged Property. Beneficiary shall
have the same right to purchase the Mortgaged Property at the foreclosure sale
as would a purchaser who is not a party to this Deed of Trust. At any sale
hereunder, Trustee may, from time to time, adjourn said sale to a later date
without readvertising the sale by giving notice of the time and place of such
continued sale at the time Trustee shall make said adjournment. Trustee shall
have full power to conduct any sale hereunder through an agent duly appointed
by him for that purpose and said appointment need not be recorded. Out of the
proceeds arising from said sale, the costs and expenses of conducting the sale
and enforcing this Deed of Trust, including a reasonable Trustee's fee and the
attorneys' fee prescribed in the Note and this Deed of Trust, shall first be
paid, next, the amount of the Liabilities then remaining unpaid shall be paid,
and, lastly, any balance remaining shall be paid to Grantor or to any other
person lawfully entitled thereto. Grantor shall remain liable for any
deficiency on the Liabilities. Notwithstanding the foregoing, Beneficiary may
sue and recover judgment an the Liabilities or any part thereof without first
requesting Trustee to exercise the power of sale granted hereunder and may seek
to collect any judgment so obtained by exercising the power of sale hereunder.
If instituting suit on the Liabilities or any part thereof, Beneficiary may
later abandon, stay or postpone such suit and request Trustee to exercise the
power of sale granted hereunder and thereafter recover judgment on the
Liabilities to the extent remaining unsatisfied. The power of sale granted
hereunder may be exercised as to all or any part of the Mortgaged Property, and
Beneficiary may sue and recover judgment on the Liabilities to the extent
remaining unsatisfied after the sale. Neither institution of suit on the
Liabilities or any part thereof nor exercise of the power of sale granted
hereunder as to less than all of the Mortgaged Property shall affect this Deed
of Trust as to the Mortgaged Property not sold pursuant to the power of sale
granted hereunder. The court in which any proceeding is pending for the purpose
of foreclosure of this Deed of Trust may, at once or at any time thereafter,
either before or after sale, without notice and without requiring bond, and
without regard to the solvency or insolvency of any person liable for payment
of the Liabilities secured hereby, and without regard to the then value of the
Mortgaged Property or the occupancy thereof as a homestead, appoint a receiver
(the provisions for the appointment of a receiver and assignment of rents being
an express condition upon which the Loan hereby secured is made) for the
benefit of Beneficiary, with power to collect the Rents, due and to become
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<PAGE> 10
due, during such foreclosure suit and the full statutory period of redemption
notwithstanding any redemption. The receiver, out of the Rents when collected,
may pay costs incurred in the management and operation of the Real Property,
prior and subordinate liens, if any, and taxes, assessments, water and other
utilities and insurance, then due or thereafter accruing, and may make and pay
for any necessary repairs to the Real Property, and may pay all or any part of
the Liabilities or other sums secured hereby or any deficiency decree entered
in such foreclosure proceedings. Upon or at any time after the filing of a suit
to foreclose this Deed of Trust, the court in which such suit is filed shall
have full power to enter an order placing Beneficiary in possession of the Real
Property with the same power granted to a receiver pursuant to this
subparagraph and with all other rights and privileges of a
mortgagee-in-possession under applicable law.
(b) Beneficiary's Right to Enter and Take Possession, Operate and
Apply Income. Beneficiary shall, at its option, have the right, acting through
its agents or attorneys, either with or without process of law, forcibly or
otherwise, to enter upon and take possession of the Real Property, expel and
remove any persons, goods, or chattels occupying or upon the same, to collect
or receive all the Rents, and to manage and control the same, and to lease the
same or any part thereof, from time to time, and, after deducting all
reasonable attorneys' fees and expenses, and all reasonable expenses incurred
in the protection, care, maintenance, management and operation of the Real
Property, distribute and apply the remaining net income in accordance with the
terms of the Loan Agreement or upon any deficiency decree entered in any
foreclosure proceedings.
8. Application of the Rents or Proceeds from Foreclosure or Sale.
In any foreclosure of this Deed of Trust by judicial action, in addition to any
of the terms and provisions of the Loan Agreement, there shall be allowed and
included in the decree for sale to be paid out of the Rents or the proceeds of
such foreclosure proceeding and/or sale:
(a) Liabilities. All of the Liabilities and other sums secured
hereby which then remain unpaid; and
(b) Other Advances. All other items advanced or paid by
Beneficiary pursuant to this Deed of Trust; and
(c) Costs, Fees and Other Expenses. All court costs, reasonable
attorneys' and paralegals' fees and expenses, appraiser's fees, advertising
costs, filing fees and transfer taxes, notice expenses, expenditures for
documentary and expert evidence, stenographer's charges, publication costs, and
costs (which may be estimated as to items to be expended after entry of the
decree) of procuring all abstracts of title, title searches and examinations,
title guarantees, title insurance policies, Torrens certificates and similar
data with respect to title which
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<PAGE> 11
Beneficiary in the reasonable exercise of its judgment may deem necessary. All
such expenses shall become additional Liabilities secured hereby when paid or
incurred by Beneficiary in connection with any proceedings, including but not
limited to probate and bankruptcy proceedings, to which Beneficiary shall be a
party, either as plaintiff, claimant or defendant, by reason of this Deed of
Trust or any indebtedness hereby secured or in connection with the preparations
for the commencement of any suit for the foreclosure, whether or not actually
commenced, or sale by advertisement. The proceeds of any sale (whether through
a foreclosure proceeding or Beneficiary's exercise of the power of sale) shall
be distributed and applied in accordance with the terms of the Loan Agreement.
9. Cumulative Remedies; Delay or Omission Not a Waiver. Each
remedy or right of Beneficiary shall not be exclusive of but shall be in
addition to every other remedy or right now or hereafter existing at law or in
equity. No delay in the exercise or omission to exercise any remedy or right
accruing on the occurrence or existence of any Event of Default shall impair
any such remedy or right or be construed to be a waiver of any such Event of
Default or acquiescence therein, nor shall it affect any subsequent Event of
Default of the same or different nature. Every such remedy or right may be
exercised concurrently or independently and when and as often as may be deemed
expedient by Beneficiary.
10. Beneficiary's Remedies against Multiple Parcels. If more than
one property, lot or parcel is covered by this Deed of Trust, and if this Deed
of Trust is foreclosed upon, or judgment is entered upon any Liabilities
secured hereby, or if Beneficiary exercises its power of sale, execution may be
made upon or Beneficiary may exercise its power of sale against any one or more
of the properties, lots or parcels and not upon the others, or upon all of such
properties or parcels, either together or separately, and at different times or
at the same time, and execution sales or sales by advertisement may likewise be
conducted separately or concurrently, in each case at Beneficiary's election.
11. No Merger. In the event of a foreclosure of this Deed of Trust
or any other mortgage or deed of trust securing the Liabilities, the
Liabilities then due the Beneficiary shall not be merged into any decree of
foreclosure entered by the court, and Beneficiary may concurrently or
subsequently seek to foreclose one or more mortgages or deeds of trust which
also secure said Liabilities.
12. Notices. Notices and other communications provided for herein
shall be in writing and shall be delivered by a courier service of recognized
standing or mailed (or, if by telex, graphic scanning or telecopy
communications equipment of the sending party, delivered by such equipment)
addressed, as follows:
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<PAGE> 12
if to Grantor:
Mississippi-34 Cellular Corporation
14th Floor, Calcasieu Marine National Bank
One Lakeshore Drive
Lake Charles, Louisiana 70604
Attn: William L. Henning, Jr.
Telecopy No. (318) 433-0587
if to Trustee:
Louis B. Fontana, Jr.
AT&T Capital Corporation
44 Whippany Road
Morristown, New Jersey 07962-1983
Telecopy No. (201) 397-3165
if to Beneficiary:
AT&T Capital Corporation
Capital Markets Division
44 Whippany Road
Morristown, New Jersey 07962-1983
Attn: Operations Manager
Telecopy No. (201) 397-4368
with a copy to:
AT&T Capital Corporation/
Capital Markets Division
44 Whippany Road
Morristown, New Jersey 07962-1983
Attn: Chief Counsel
Telecopy No. (201) 397-3165
with a copy to:
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Attn: Alan Gabbay
Telecopy No. (312) 853-7036
All notices and other communications given to any party hereto in accordance
with the provisions of this Deed of Trust shall be deemed to have been given
(a) three days after mailing when sent by registered or certified mail, postage
prepaid, return receipt requested, or (b) upon receipt, if by courier service
or any telecopy or graphic scanning communications equipment of the sender, in
each case addressed to such party as provided in this Section or in accordance
with the latest unrevoked direction from such party.
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<PAGE> 13
13. Extension of Payments. Grantor agrees that, without affecting
the liability of any person for payment of the Liabilities secured hereby or
affecting the lien of this Deed of Trust upon the Mortgaged Property or any
part thereof (other than persons or property explicitly released as a result of
the exercise by Beneficiary of its rights and privileges hereunder),
Beneficiary may at any time and from time to time, on request of the Grantor,
without notice to any person liable for payment of any Liabilities secured
hereby, but otherwise subject to the provisions of the Loan Agreement, extend
the time, or agree to alter or amend the terms of payment of such Liabilities.
Grantor further agrees that any part of the security herein described may be
released with or without consideration without affecting the remainder of the
Liabilities or the remainder of the security.
14. Governing Law. Grantor agrees that this Deed of Trust is to be
construed, governed and enforced in accordance with the laws of the State.
Wherever possible, each provision of this Deed of Trust shall be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Deed of Trust shall be prohibited by or invalid under
applicable law, such provision shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Deed of Trust.
15. Satisfaction of Deed of Trust. Upon full payment of all the
Liabilities, at the time and in the manner provided in the Loan Agreement or
upon satisfaction of the conditions set forth in the Loan Agreement for release
of the Mortgaged Property from this Deed of Trust, this conveyance or lien
shall be null and void and, upon demand therefor following such payment or
satisfaction of the conditions set forth in the Loan Agreement for release of
the Mortgaged Property, as the case may be, a satisfaction of mortgage or
reconveyance of the Mortgaged Property shall promptly be provided by
Beneficiary to Grantor.
16. Successors and Assigns Included in Parties. This Deed of Trust
shall be binding upon the Grantor and upon the successors, assigns and vendees
of the Grantor and shall inure to the benefit of the Trustee's and the
Beneficiary's successors and assigns; all references herein to the Grantor, the
Trustee and the Beneficiary shall be deemed to include their respective
successors and assigns. Grantor's successors and assigns shall include, without
limitation, a receiver, trustee or debtor in possession of or for the Grantor.
Wherever used, the singular number shall include the plural, the plural shall
include the singular, and the use of any gender shall be applicable to all
genders.
17. Waiver of Appraisement, Valuation, Stay, Extension and
Redemption Laws. Grantor agrees, to the full extent permitted by law, that at
all times following an Event of Default, neither Grantor nor anyone claiming
through or under it
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<PAGE> 14
shall or will set up, claim or seek to take advantage of any appraisement,
valuation, stay, or extension laws now or hereafter in force, in order to
prevent or hinder the enforcement or foreclosure of this Deed of Trust or the
absolute sale of the Mortgaged Property or the final and absolute putting into
possession thereof, immediately after such sale, of the purchaser thereat; and
Grantor, for itself and all who may at any time claim through or under it,
hereby waives, to the full extent that it may lawfully so do, the benefit of
all such laws and any and all right to have the assets comprising the Mortgaged
Property marshalled upon any foreclosure of the lien hereof and agrees that
Beneficiary or any court having jurisdiction to foreclose such lien may sell
the Mortgaged Property in part or as an entirety. To the full extent permitted
by law, Grantor hereby waives any and all statutory or other rights of
redemption from sale under any order or decree of foreclosure of this Deed of
Trust, on its own behalf and on behalf of each and every person acquiring any
interest in or title to the Mortgaged Property subsequent to the date hereof.
18. Interpretation with Other Documents. Notwithstanding anything
in this Deed of Trust to the contrary, in the event of a conflict or
inconsistency between the Deed of Trust and the Loan Agreement, the provisions
of the Loan Agreement shall govern.
19. Future Advances. This Deed of Trust is given for the purpose
of securing loan advances which the Beneficiary may make to or for Grantor
pursuant and subject to the terms and provisions of the Loan Agreement. The
parties hereto intend that, in addition to any other debt or obligation secured
hereby, this Deed of Trust shall secure unpaid balances of loan advances made
after this Deed of Trust is delivered for recordation in the official records
of the city or county in which the Mortgaged Property is located, whether made
pursuant to an obligation of Beneficiary or otherwise, and in such event, such
advances shall be secured to the same extent as if such future advances were
made on the date hereof, although there may be no advance made at the time of
execution hereof and although there may be no indebtedness outstanding at the
time any advance is made. Such loan advances may or may not be evidenced by
notes executed pursuant to the Loan Agreement.
20. Invalid Provisions to Affect No Others. In the event that any
of the covenants, agreements, terms or provisions contained in this Deed of
Trust shall be invalid, illegal or unenforceable in any respect, the validity
of the remaining covenants, agreements, terms or provisions contained herein or
in the Loan Agreement shall not be in any way affected, prejudiced or disturbed
thereby. In the event that the application of any of the covenants, agreements,
terms or provisions of this Deed of Trust is held to be invalid, illegal or
unenforceable, those covenants, agreements, terms and provisions shall not be
in any way affected, prejudiced or disturbed when otherwise applied.
-14-
<PAGE> 15
21. Changes. Neither this Deed of Trust nor any term hereof may be
changed, waived, discharged or terminated orally, or by any action or inaction,
but only by an instrument in writing signed by the party against which
enforcement of the change, waiver, discharge or termination is sought. To the
extent permitted by law, any agreement hereafter made by Grantor and
Beneficiary relating to this Deed of Trust shall be superior to the rights of
the holder of any intervening lien or encumbrance.
22. Time of Essence. Time is of the essence with respect to the
provisions of this Deed of Trust.
23. Successor Trustee. Beneficiary, or any successor in ownership
of any indebtedness secured hereby, may from time to time, by instrument in
writing, substitute a successor or successors to any Trustee named herein or
acting hereunder, which instrument, executed by the Beneficiary duly
acknowledged and recorded in the office of the recorder of the county or
counties where the Mortgaged Property is situated, shall be conclusive proof of
proper substitution of such successor Trustee or Trustees, who shall, without
conveyance from the Trustee predecessor, succeed to all its title, estate,
rights, powers and duties. Said instrument must contain the name of the
original Grantor, Trustee and Beneficiary hereunder, the recording information
where this Deed of Trust is recorded and the name and address of the new
Trustee.
24. Trustee Covenants. Trustee covenants faithfully to perform the
trust herein created, being liable, however, only for gross negligence or
willful misconduct. Trustee accepts this Trust, when this Deed of Trust, duly
executed and acknowledged, is made a public record as provided by law. Trustee
is not obligated to notify any party hereto or any action or proceeding in
which Grantor, Beneficiary or Trustee shall be a party unless brought by
Trustee.
25. Maturity Date. The Liabilities have a final maturity date of
September 30, 2002.
IN WITNESS WHEREOF, this instrument is executed as of the day and year
first above written by the person or persons identified below on behalf of
Grantor (and said person or persons hereby represent that they possess full
power and authority to execute this instrument).
-15-
<PAGE> 16
THE GRANTOR HEREBY DECLARES AND ACKNOWLEDGES THAT THE GRANTOR HAS
RECEIVED, WITHOUT CHARGE, A TRUE COPY OF THIS DEED OF TRUST.
GRANTOR:
MISSISSIPPI-34 CELLULAR CORPORATION
By /s/ WILLIAM L. HENNING, JR.
----------------------------------
Its __________ President
Attest:
By /s/ (ILLEGIBLE)
-------------------------------
Its _________ Secretary
<PAGE> 17
STATE OF LOUISIANA )
) SS.
COUNTY OF CALCASIEU )
Personally appeared before me, the undersigned authority in and for
the aforesaid jurisdiction, the within named William L. Henning, Jr., who
acknowledged to me that William Henning, Jr. is President of Mississippi-34
Cellular Corporation, a Mississippi corporation, and that Robert Piper signed
and delivered the foregoing instrument of writing on the day and year therein
mentioned for and on behalf of said corporation as its official act and deed,
being duly authorized so to do.
Given under my hand and official seal this 28th day of December, 1993.
/s/ (ILLEGIBLE)
------------------------------------
Notary Public
(Seal)
My Commission Expires: Lifetime
/s/ (ILLEGIBLE)
------------------------------------
Notary Public in and for the
State of Louisiana
<PAGE> 18
EXHIBIT A
(DESCRIPTION FOR MISSISSIPPI-34 CELLULAR CORPORATION)
A certain parcel of land situated in the NW-1/4 of the NW-1/4, of Section 8,
Township 14 North, Range 4 East, Holmes County, Mississippi, containing 0.70
acre, more or less, and being more particularly described as follows:
Commencing at the SE corner of the NW-1/4 of the NW-1/4 of Section 8, Township
14 North, Range 4 East, Holmes County, Mississippi; run thence north 45 degrees
20 minutes 55 seconds west for 523.50 feet to a point, said point hereinafter
referred to as the POINT OF BEGINNING: Thence south 82 degrees 18 minutes 24
seconds west along a fence for 53.67 feet; thence south 87 degrees 36 minutes
42 seconds west along a fence for 102.66 feet; thence north 10 degrees 40
minutes 24 seconds east for 181.35 feet; thence south 79 degrees 19 minutes 36
seconds east for 87.71 feet; thence north 37 degrees 10 minutes 04 seconds east
for 91.31 feet; thence north 63 degrees 40 minutes 04 seconds east for 47.62
feet to the west line of a gravel county road; thence south 12 degrees 28
minutes 34 seconds west along the west line of said road for 109.34 feet;
thence south 15 degrees 31 minutes 52 seconds west along the west line of said
road for 142.85 feet to the POINT OF BEGINNING.
INDEXING INSTRUCTION
The property described in this Deed of Trust is located in the NW 1/4 of the NW
1/4 of Section 8, Township 14 North, Range 4 East, Holmes County, Mississippi.
<PAGE> 19
EXHIBIT B
Permitted Exceptions to Title
Those title exceptions listed on title policy Z 300598, dated May 6,
1993, issued by Mississippi Valley Title Insurance Company and Old Republic
National Title Insurance Company for the property described on Exhibit A
hereto.
<PAGE> 1
EXHIBIT 4.47
EQUIPMENT NOTE
$2,138,836.03 PARSIPPANY, NEW JERSEY
December 30, 1993
FOR VALUE RECEIVED, the undersigned, MISSISSIPPI-34 CELLULAR
CORPORATION, a Mississippi corporation (the "Borrower"), hereby unconditionally
promises to pay to the order of AT&T CREDIT CORPORATION, a Delaware corporation
(the "Lender"), at its offices at 2 Gatehall Drive, Parsippany, New Jersey
07054, or at such other place as the holder of this Equipment Note may from
time to time designate in writing, in lawful money of the United States of
America and in immediately available funds, the principal sum of TWO MILLION
ONE HUNDRED THIRTY EIGHT THOUSAND EIGHT HUNDRED THIRTY SIX & 03-100
DOLLARS($2,138,836.03), together with interest on the principal balance
remaining from time to time unpaid at the rate provided below from the date
such principal is advanced until payment in full thereof. This Equipment Note
is referred to in and was executed and delivered pursuant to Section 2.04 of
that certain Loan and Security Agreement dated as of DECEMBER 30 1993 by and
between the Borrower and the Lender (the "Loan Agreement"), to which reference
is hereby made for a statement of terms and conditions under which the
Equipment Loans evidenced hereby are being made and are to be repaid. All terms
which are capitalized and used herein (which are not otherwise specifically
defined herein) and which are defined in the Loan Agreement shall be used in
this Equipment Note as defined in the Loan Agreement.
The principal indebtedness evidenced hereby shall be payable in
twenty-two (22) consecutive quarterly installments, as set forth on Schedule A
attached hereto. The principal amount hereof may be prepaid only in accordance
with the terms of the Loan Agreement.
Borrower further promises to pay interest on the outstanding unpaid
principal amount hereof which remains unpaid from the date hereof until payment
in full hereof at the per annum rate equal to 6.13%, payable quarterly in
arrears on the Payment Dates and subject to capitalization of the interest
payable prior to the Commitment Termination Date in accordance with the
provisions of Section 2.05 of the Loan Agreement, and calculated on the basis
of a 360-day year comprised of twelve 30 day months, compounded monthly;
provided, however, that if Borrower shall default in the payment of the
principal or interest hereof, the Borrower promises to, on demand, pay interest
on the entire unpaid principal amount hereof at a rate equal to four percent
(4%) per annum above the rate of interest that would otherwise be applicable,
from the date such payment is due to the date of actual payment, and if any
other Event of Default occurs and is continuing, the Borrower promises to, on
demand, pay interest on the entire unpaid principal amount hereof at a rate
equal to two percent (2%) per annum above the rate of interest that would
otherwise be applicable until such Event of Default is cured.
If payment hereunder becomes due and payable on a Saturday, Sunday, or
legal holiday, under the laws of the State of New Jersey, the due date thereof
shall be extended to the next succeeding Business Day, and interest shall be
payable thereon during such extension at the rate specified above. Checks,
drafts or similar items of payment received by the Lender shall not
<PAGE> 2
constitute payment until the same is honored by the Lender's depository bank
and final settlement thereof is reflected by irrevocable credit to the lender's
account in such bank, BUT SOLELY FOR THE PURPOSE OF COMPUTING INTEREST EARNED
BY THE LENDER, CREDIT SHALL BE GIVEN TO THE BORROWER ON THE BUSINESS DAY SUCH
ITEM OR PAYMENT IS RECEIVED BY THE LENDER. In no contingency or event
whatsoever shall interest charged hereunder, however such interest may be
characterized or computed, exceed the highest rate permissible under any law
which a court of competent jurisdiction shall, in a final determination, deem
applicable hereto. In the event that such a court determines that the Lender
has received interest hereunder in excess of the highest rate applicable
hereto, the Lender shall promptly refund such excess interest to Borrower.
Except as otherwise agreed in the Loan Agreement, payments received by
the Lender from the Borrower on this Equipment Note shall be applied first to
the payment of interest which is due and payable and only thereafter to the
outstanding principal balance.
Presentment, protest and notice of nonpayment are hereby waived by the
Borrower.
This Equipment Note shall be interpreted and the rights and
liabilities of the parties hereto determined in accordance with the internal
laws (as opposed to conflicts of law provisions) and decisions of the State of
New Jersey. Whenever possible each provision of this Equipment Note shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Equipment Note shall be prohibited by or invalid
under applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Equipment Note. Whenever in this Equipment
Note reference is made to the Lender or Borrower, such reference is made to
include, as applicable, a reference to their respective successors and assigns.
The provisions of this Equipment Note shall be binding upon and inure to the
benefit of said successors and assigns. Borrower's successors and assigns shall
include, without limitation, a receiver, trustee or debtor in possession of or
for the Borrower.
MISSISSIPPI-34 CELLULAR
CORPORATION
By: /s/ WILLIAM L. HENNING, JR.
----------------------------
Its: President
---------------------------
<PAGE> 3
PAYMENT SCHEDULE
DATED AS OF DECEMBER 30, 1993
<TABLE>
<CAPTION>
BEG. PRINCIPAL PRINCIPAL PRINCIPAL ENDING PRINCIPAL
QUARTER BALANCE REPYMT% AMORTIZATION BALANCE INTEREST TOTAL PAYMENT
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
2,138,836.03
1 2,138,836.03 2,172,521.03 33,685.00 0.00
2 2,172,521.03 2,205,985.28 33,464.25 0.00
3 2,205,985.28 2,239,964.99 33,979.71 0.00
4 2,239,964.99 2,274,468.11 34,503.12 0.00
5 2,274,468.11 2,309,502.69 35,034.58 0.00
6 2,309,502.69 2,345,076.93 35,574.24 0.00
7 2,345,076.93 2,381,199.13 36,122.20 0.00
8 2,381,199.13 2,417,877.74 36,678.61 0.00
9 2,417,877.74 2,455,121.32 37,243.58 0.00
10 2,455,121.32 2,492,938.58 37,817.26 0.00
11 2,492,938.58 2,531,338.36 38,399.78 0.00
12 2,531,338.36 2,570,329.62 38,991.26 0.00
13 2,570,329.62 2,609,921.48 39,591.86 0.00
14 2,609,921.48 2,650,123.19 40,201.71 0.00
15 2,650,123.19 1.00% 26,501.23 2,623,621.96 40,820.96 67,322.19
16 2,623,621.96 1.00% 26,501.23 2,597,120.73 40,412.75 66,913.98
17 2,597,120.73 1.90% 50,352.34 2,546,768.39 40,004.54 90,356.88
18 2,546,768.39 1.90% 50,352.34 2,496,416.04 39,228.94 89,581.28
19 2,496,416.04 1.90% 50,352.34 2,446,063.70 38,453.34 88,805.68
20 2,446,063.70 1.90% 50,352.34 2,395,711.36 37,677.74 88,030.08
21 2,395,711.36 3.75% 99,379.62 2,296,331.74 36,902.14 136,281.76
22 2,296,331.74 3.75% 99,379.62 2,196,952.12 35,371.36 134,750.98
23 2,196,952.12 3.75% 99,379.62 2,097,572.50 33,840.57 133,220.19
24 2,097,572.50 3.75% 99,379.62 1,998,192.89 32,309.79 131,689.41
25 1,998,192.89 4.75% 125,880.85 1,872,312.03 30,779.00 156,659.85
26 1,872,312.03 4.75% 125,880.85 1,746,431.18 28,840.01 154,720.86
27 1,746,431.18 4.75% 125,880.85 1,620,550.33 26,901.01 152,781.86
28 1,620,550.33 4.75% 125,880.85 1,494,669.48 24,962.01 150,842.87
29 1,494,669.48 6.00% 159,007.39 1,335,662.09 23,023.02 182,030.41
30 1,335,662.09 6.00% 159,007.39 1,176,654.70 20,573.76 179,581.15
31 1,176,654.70 6.00% 159,007.39 1,017,647.30 18,124.50 177,131.90
32 1,017,647.30 6.00% 159,007.39 858,639.91 15,675.25 174,682.64
33 858,639.91 8.10% 214,659.98 643,979.94 13,225.99 227,885.97
34 643,979.94 8.10% 214,659.98 429,319.96 9,919.49 224,579.47
35 429,319.96 8.10% 214,659.98 214,659.98 6,612.99 221,272.97
36 214,659.98 8.10% 214,659.98 0.00 3,306.50 217,966.48
</TABLE>
<PAGE> 1
EXHIBIT 4.67
EXECUTION COPY
- --------------------------------------------------------------------------------
LOAN AND SECURITY AGREEMENT
Dated as of December 20, 1993
Between
MISSISSIPPI-34 CELLULAR CORPORATION
and
AT&T CREDIT CORPORATION
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
1. DEFINITIONS AND OTHER TERMS Page
----
<S> <C>
1.01 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.02 Accounting Terms . . . . . . . . . . . . . . . . . . . . . . . . . .
1.03 Others Defined in New Jersey Uniform Commercial Code . . . . . . . .
2. LOANS
2.01 Agreement to Lend . . . . . . . . . . . . . . . . . . . . . . . . .
2.02 Equipment Loan(s) . . . . . . . . . . . . . . . . . . . . . . . . .
2.03 Capital Loan(s); Procedure for Proper Request . . . . . . . . . . .
2.04 The Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.05 Interest on Loans . . . . . . . . . . . . . . . . . . . . . . . . .
2.06 Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.07 Default Rate of Interest . . . . . . . . . . . . . . . . . . . . . .
2.08 Optional Prepayment of Loans; Mandatory Prepayment of Loans . . . .
2.09 Payment, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.10 Maximum Lawful Interest Rate . . . . . . . . . . . . . . . . . . . .
3. REPRESENTATIONS AND WARRANTIES
3.01 Organization; Powers . . . . . . . . . . . . . . . . . . . . . . . .
3.02 Authorization by Borrower. . . . . . . . . . . . . . . . . . . . . .
3.03 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . .
3.04 No Material Adverse Change . . . . . . . . . . . . . . . . . . . . .
3.05 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.06 Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.07 No Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.08 Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.09 Licenses, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.10 Compliance With Laws . . . . . . . . . . . . . . . . . . . . . . . .
3.11 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.12 Investment Company Act; Public Utility Holding Company Act . . . . .
3.13 Federal Reserve Regulations . . . . . . . . . . . . . . . . . . . .
3.14 Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.15 Chief Place of Business . . . . . . . . . . . . . . . . . . . . . .
3.16 Other Corporate Names . . . . . . . . . . . . . . . . . . . . . . .
3.17 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.18 Business Plan and Operating Projections . . . . . . . . . . . . . .
3.19 Capitalization and Subsidiaries . . . . . . . . . . . . . . . . . .
3.20 Real Property, Leases and Easements. . . . . . . . . . . . . . . . .
3.21 No Material Misstatements. . . . . . . . . . . . . . . . . . . . . .
</TABLE>
-2-
<PAGE> 3
<TABLE>
<S> <C>
4. CONDITIONS FOR LOANS
4.01 Conditions Precedent to the Initial Loan . . . . . . . . . . . . . .
4.02 Conditions Precedent to All Loans . . . . . . . . . . . . . . . . .
5. AFFIRMATIVE COVENANTS
5.01 Corporate and Franchise Existence . . . . . . . . . . . . . . . . .
5.02 Compliance with Laws, Etc. . . . . . . . . . . . . . . . . . . . . .
5.03 Maintenance of Properties. . . . . . . . . . . . . . . . . . . . . .
5.04 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.05 Obligations and Taxes . . . . . . . . . . . . . . . . . . . . . . .
5.06 Financial Statements, Reports, etc. . . . . . . . . . . . . . . . .
5.07 Litigation and Other Notices . . . . . . . . . . . . . . . . . . . .
5.08 Mortgages and Landlord Consents . . . . . . . . . . . . . . . . . .
5.09 ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.10 Access to Premises and Records . . . . . . . . . . . . . . . . . . .
5.11 Design and Construction; Operating Licenses . . . . . . . . . . . .
5.12 Environmental Notices . . . . . . . . . . . . . . . . . . . . . . .
5.13 Amendment of Organization Documents . . . . . . . . . . . . . . . .
5.14 Engineer and Independent Consultant . . . . . . . . . . . . . . . .
5.15 Changes in Regulation . . . . . . . . . . . . . . . . . . . . . . .
5.16 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.17 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . .
6. NEGATIVE COVENANTS
6.01 Liens, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6.02 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . .
6.03 Sale of Assets, Consolidation, Merger, etc. . . . . . . . . . . . .
6.04 Dividends; Distribution of Assets; Certain Debt . . . . . . . . . .
6.05 Guarantees; Third-Party Sales and Leases . . . . . . . . . . . . . .
6.06 Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6.07 Permitted Activities . . . . . . . . . . . . . . . . . . . . . . . .
6.08 Disposition of Licenses, etc. . . . . . . . . . . . . . . . . . . .
6.09 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . .
6.10 ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6.11 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6.12 Margin Regulation . . . . . . . . . . . . . . . . . . . . . . . . .
6.13 Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . .
6.14 Management Fees. . . . . . . . . . . . . . . . . . . . . . . . . . .
6.15 Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . . .
7. COLLATERAL SECURITY
7.01 Collateral Security . . . . . . . . . . . . . . . . . . . . . . . .
7.02 Preservation of Collateral and Perfection of Security
Interests Therein . . . . . . . . . . . . . . . . . . . . . . . . .
</TABLE>
-3-
<PAGE> 4
<TABLE>
<S> <C>
7.03 Appointment of Lender as the Borrower's Attorney-in-Fact . . . . . .
7.04 Collection of Accounts and Restricted Account Arrangements . . . . .
8. EVENTS OF DEFAULT; REMEDIES
8.01 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . .
8.02 Termination of Commitment; Acceleration . . . . . . . . . . . . . .
8.03 Waiver of Demand . . . . . . . . . . . . . . . . . . . . . . . . . .
8.04 Rights and Remedies Generally . . . . . . . . . . . . . . . . . . .
8.05 Entry Upon Premises and Access to Information . . . . . . . . . . .
8.06 Sale or Other Disposition of Collateral by Lender . . . . . . . . .
8.07 Governmental Approvals . . . . . . . . . . . . . . . . . . . . . . .
8.08 Appointment of Trustee or Receiver . . . . . . . . . . . . . . . . .
8.09 Lender Not Liable . . . . . . . . . . . . . . . . . . . . . . . . .
8.10 Right of Setoff . . . . . . . . . . . . . . . . . . . . . . . . . .
9. MISCELLANEOUS
9.01 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9.02 No Waivers; Amendments . . . . . . . . . . . . . . . . . . . . . . .
9.03 Governing Law and Jurisdiction, . . . . . . . . . . . . . . . . . .
9.04 Expenses; Documentary Taxes . . . . . . . . . . . . . . . . . . . .
9.05 Equitable Relief . . . . . . . . . . . . . . . . . . . . . . . . . .
9.06 Indemnification; Limitation of Liability . . . . . . . . . . . . . .
9.07 Survival of Agreements, Representations and Warranties, etc. . . . .
9.08 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . .
9.09 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9.10 Cover Page, Table of Contents and Section Headings . . . . . . . . .
9.11 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9.12 Application of Payments . . . . . . . . . . . . . . . . . . . . . .
9.13 Marshalling; Payments Set Aside . . . . . . . . . . . . . . . . . .
9.14 Service of Process . . . . . . . . . . . . . . . . . . . . . . . . .
9.15 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . .
9.16 Consolidation of Operations . . . . . . . . . . . . . . . . . . . .
9.17 Entire Agreement, etc. . . . . . . . . . . . . . . . . . . . . . . .
</TABLE>
-4-
<PAGE> 5
EXHIBITS
EXHIBIT A -- Business Plan
EXHIBIT B -- Form of Pledge Agreement
EXHIBIT C -- Form of Capital Note
EXHIBIT D -- Form of Equipment Note
EXHIBIT E -- Form of Delivery and Acceptance Certificate
EXHIBIT F -- Form of Notice of Borrowing
EXHIBIT G -- Borrower's Pro Forma Balance Sheet
EXHIBIT H -- Form of Borrower's Secretary's Certificate
EXHIBIT I-1 -- Form of Opinion of Borrower's Special Counsel
EXHIBIT I-2 -- Form of opinion of Borrower's Local Counsel
EXHIBIT I-3 -- Form of Opinion of Borrower's Regulatory Counsel
EXHIBIT J -- Form of Loss Payable Endorsement
EXHIBIT K -- Form of Restricted Account Agreement
EXHIBIT L -- Form of Landlord Waiver
EXHIBIT M -- Form of Real Property Letter
EXHIBIT N -- Form of Monthly Report
EXHIBIT O -- Form of Quarterly Report
-5-
<PAGE> 6
SCHEDULES
SCHEDULE 1.01 -- Mortgages
SCHEDULE 3.02 -- Governmental Consents
SCHEDULE 3.05 -- Litigation
SCHEDULE 3.10 -- Compliance with Laws
SCHEDULE 3.11 -- ERISA
SCHEDULE 3.14 -- Collateral
SCHEDULE 3.17 -- Insurance
SCHEDULE 3.20 -- Real Property, Leases and Easements
SCHEDULE 7.04 -- Collection Accounts
-6-
<PAGE> 7
LOAN AND SECURITY AGREEMENT ("Agreement") dated as of December
20, 1993 between MISSISSIPPI-34 CELLULAR CORPORATION, a Mississippi corporation
(the "Borrower"), and AT&T CREDIT CORPORATION, a Delaware corporation
("Lender").
WHEREAS, the Borrower has requested Lender to extend credit to
the Borrower to enable the Borrower to borrow; and
WHEREAS, Lender is willing to extend such credit to the Borrower
subject to, and on the terms and conditions of, this Agreement;
Accordingly, the Borrower and Lender agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. As used in this Agreement, the
following words and terms shall have the meanings specified below:
"Accounts" shall mean all present and future rights of the
Borrower to payment for goods sold or leased or for services rendered which are
not evidenced by instruments or chattel paper, and whether or not they have
been earned by performance.
"Affiliate" shall mean any Person directly or indirectly
controlling, controlled by or under common control with the Borrower, and any
officer, director or shareholder of such Person or the Borrower.
"Applicable Cash Flow Margin" shall mean (i) with respect to any
four fiscal quarter period of the Borrower not ending on December 31 of any
calendar year, an amount equal to 25% of the Estimated Cash Flow projected for
the Borrower for such period, (ii) with respect to any four fiscal quarter
period of the Borrower on December 31 of each calendar year beginning in 1994
and ending in 1997, an amount equal to 10% of the Estimated Cash Flow projected
for the Borrower to such four fiscal quarter period, and (iii) with respect to
any four fiscal quarter period of the Borrower ending on December 31 of each
calendar year beginning in 1998, an amount equal to 15% of the Estimated Cash
Flow projected for the Borrower for such four fiscal quarter period.
"Applicable Margin" shall mean (i) with respect to Equipment
Loans bearing interest at the Fixed Rate 3.35% per annum, (ii) with respect to
Capital Loans bearing interest at the Fixed Rate, 3.60% per annum, (iii) with
respect to Equipment
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<PAGE> 8
Loans bearing interest at the Variable Rate, 3.00% per annum, and (iv) with
respect to Capital Loans bearing interest at the Variable Rate, 3.25% per
annum.
"AT&T" shall mean American Telephone and Telegraph Company, a New
York corporation.
"Benefit Plan" shall mean a defined benefit plan as defined in
Section 3(35) of ERISA (other than a Multiemployer Plan) in respect of which
Borrower or any ERISA Affiliate is, or within the immediately preceding six (6)
years was, an "employer" as defined in Section 3(5) of ERISA.
"Business" shall mean the business of operating and maintaining
the System and all operations related thereto or in support thereof.
"Business Day" shall mean any day not a Saturday, Sunday or legal
holiday in the State of New Jersey, on which banks are open for business in New
Jersey City.
"Business Plan" shall mean Borrower's Business Plan, attached as
Exhibit A hereto.
"Capital Loan" shall mean a Loan made pursuant to Sections 2.01
and 2.03 hereof.
"Capital Loan Commitment Amount" shall mean the lesser of (i)
$4,152,000, inclusive of capitalized interest, if any, on the Capital Loans and
(ii) the outstanding principal balance of the Equipment Loans, inclusive of
capitalized interest, if any, on the Equipment Loans.
"Capital Note" shall mean a promissory note of the Borrower,
substantially in the form of Exhibit C attached hereto.
"Cash Equity Contributions" shall mean cash equity contributions
made by the Borrower's shareholders to the Borrower, exclusive of Permitted
Capital Contributions.
"Cash Flow" shall mean for any period of the Borrower, (i) Net
Income, plus (ii) non-cash charges deducted in the calculation of Net Income,
plus (iii) provisions for income taxes deducted in the calculation of Net
Income minus (iv) Borrower's budgeted capital expenditures for such period
(except that during any fiscal quarter occurring in calendar year 1994, such
amount shall not be subtracted), plus (v) scheduled payments of interest on the
Loans for such period, plus or (minus) (vi) decreases (or increases) in working
capital, as determined in accordance with GAAP.
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<PAGE> 9
"Certificate" shall mean any certificate of public convenience
and necessity issued by the PUC to the Borrower and authorizing the Borrower to
operate a cellular mobile telephone system in the Franchise Area.
"Collateral" shall mean all property and interests in property now
owned or hereafter acquired by the Borrower in or upon which a security
interest, lien or mortgage is granted to Lender by the Borrower, whether under
this Agreement or the other Loan Documents.
"Commitment" shall mean Lender's agreement to lend as set forth
in Section 2.01.
"Commitment Amount" shall mean the Equipment Loan Commitment
Amount or the Capital Loan Commitment Amount, as applicable.
"Commitment Termination Date" shall mean the earlier of (i) the
date which is two years after the Effective Date and (ii) December 31, 1993 in
the event the initial Loan is not made on or prior to such date.
"Construction Permits" shall mean the authorizations issued to
the Borrower by the FCC granting the Borrower the right to construct a cellular
mobile telephone system on Frequency Block A in each Rural Service Area
included in the Franchise Area.
"Contaminant" shall mean any waste, pollutant, hazardous
substance, toxic substance, hazardous waste, special waste, petroleum or
petroleum-derived substance or waste, or any constituent of any such substance
or waste.
"Conversion Date" shall mean the date on which any Variable Rate
Loans are converted to Fixed Rate Loans pursuant to the provisions of Section
2.05(a).
"Debt" shall mean, with respect to any Person, (i) indebtedness
for borrowed money, (ii) obligations evidenced by bonds, debentures, notes or
other similar instruments, (iii) obligations which have been incurred in
connection with the acquisition of property or services (including, without
limitation, obligations to pay the deferred purchase price of property or
services), excluding trade payables and accrued expenses incurred in the
ordinary course of business, (iv) obligations as lessee under leases which
shall have been or should be, in accordance with GAAP, recorded as capital or
operating leases, (v) all Guarantees of such Person, and (vi) all indebtedness,
obligations or other liabilities in respect of interest rate insurance product
agreements.
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<PAGE> 10
"Effective Date" shall mean the date on which this Agreement has
been duly executed by and delivered to all parties hereto.
"Engineer" shall mean an engineering consultant which may or may
not be an employee of an affiliate of Lender.
"Equipment" shall mean all AT&T cellular system equipment
(including related services and software licenses), peripheral equipment,
wiring and miscellaneous items purchased by the Borrower from AT&T pursuant to
and more particularly described in the Purchase Agreement and all attachments,
accessories, additions, substitutions, products, replacements, rentals and
proceeds (including, but not limited to insurance proceeds) thereof.
"Equipment Loan" shall mean a loan made pursuant to Sections 2.01
and 2.02 hereof.
"Equipment Loan Commitment Amount" shall mean $5,828,000,
inclusive of capitalized interest, if any, on the Equipment Loans.
"Equipment Note" shall mean a promissory note of the Borrower,
substantially in the form of Exhibit D attached hereto.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as the same may be amended.
"ERISA Affiliate" shall mean any (i) corporation which is a
member of the same controlled group of corporations (within the meaning of
section 414(b) of the IRC) as the Borrower, (ii) partnership or other trade or
business (whether or not incorporated) under common control (within the meaning
of section 414(c) of the IRC) with the Borrower and (iii) member of the same
affiliated service group (within the meaning of section 414(m) of the IRC) as
the Borrower, any corporation described in clause (i) above or any partnership
or trade or business described in clause (ii) above.
"Estimated Cash Flow" shall mean for any fiscal period,
Borrower's estimated Cash Flow as set forth in the Operating Projections.
"Event of Default" shall have the meaning given to such term in
Article VIII hereof.
"Excess Cash Flow" shall mean with respect to any fiscal period
of the Borrower, the positive amount of Cash Flow for such period, minus
scheduled payments of principal and interest on the Loans during such period,
minus income taxes due and payable during such period.
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<PAGE> 11
"FCC" shall mean the Federal Communications Commission or any
successor commission or agency having jurisdiction over the Borrower or the
Franchise.
"Fixed Charge Coverage Ratio" shall mean with respect to any
consecutive four fiscal quarter period of Borrower, the ratio of (i) Cash Flow,
plus Cash Equity Contributions, minus actual income taxes, if any, due and
payable during such period (excluding changes in reserve balances) calculated
at the end of such period to (ii) Fixed Charges.
"Fixed Charges" shall mean with respect to any fiscal period of
Borrower, the sum of the following amounts calculated at the end of such
period: (i) interest expenses of the Borrower, plus (ii) fees payable by the
Borrower to the Lender (excluding fees and expenses accrued, incurred or paid
on or prior to the Effective Date plus (iii) scheduled quarterly principal and
interest payments required to be made by the Borrower with respect to the
Loans.
"Fixed Rate" shall mean, with respect to (i) each Note which was
originally a Fixed Rate Note, a rate equal to the average of the "ask yields"
of United States Treasury Notes maturing in the month five years from the month
of issuance of such Note, as quoted in the Eastern Edition of The Wall street
Journal (or any successor publication) on a date two (2) Business Days prior to
the date of making the Loan evidenced by such Note (or if there is no United
States Treasury Note maturing in such month, an interpolation by Lender of the
"ask yields" of United States Treasury Notes maturing in the month closest but
prior to, and in the month closest but subsequent to, the month five years from
the month of issuance of such Note, as quoted in the Eastern Edition of The
Wall Street Journal (or any successor publication) on the date two (2) Business
Days prior to the date of issuance of such Note), plus in either case, the
Applicable Margin and (ii) each Variable Rate Note converted to a Fixed Rate
Note pursuant to the provisions of Section 2.05, a rate equal to the average of
the "ask yields" of United States Treasury Notes maturing in the month five
years from the month in which the Conversion Date occurs, as quoted in the
Eastern Edition of The Wall Street Journal (or any successor publication) on
the date two (2) Business Days prior to the Conversion Date (or if there is no
United States Treasury Note maturing in such month, an interpolation of the
"ask yields" by Lender of United States Treasury Notes maturing in the month
closest but prior to, and in the month in which the Conversion Date occurs, as
quoted in the Eastern Edition of The Wall Street Journal (or any successor
publication) on the date two (2) Business Days prior to the Conversion Date),
plus in either case, the Applicable Margin.
-11-
<PAGE> 12
"Fixed Rate Note" shall mean any Note, which bears interest at a
fixed rate pursuant to Section 2.05.
"Franchise" shall mean all the Borrower's rights to operate
cellular mobile telephone systems in the Franchise Area pursuant to FCC
licenses and any Certificate now or hereafter granted to or otherwise acquired
by the Borrower for the Franchise Area.
"Franchise Area" shall mean the area consisting of the
Mississippi 3 and 4 Rural Service Areas, including the following counties in
the State of Mississippi: Bolivar, Sunflower, Tallahatchie, Leflore, Carroll,
Holmes, Yalobusha, Grenada, Calhoun, Chickasaw, Clay and Monroe.
"Guarantee" shall mean any obligation, contingent or otherwise,
of any Person guaranteeing any indebtedness of any other Person (the "Primary
Obligor") in any manner, whether directly or indirectly, and including any
obligation of such Person, direct or indirect, (i) to purchase or pay (or
advance or supply funds for the purchase or payment of) such indebtedness or to
purchase (or to advance or supply funds for the purchase of) any security for
the payment of such indebtedness; (ii) to purchase property, securities or
services for the purpose of assuring the owner of such indebtedness of the
payment of such indebtedness; or (iii) to maintain working capital, equity
capital or other financial statement condition of the Primary Obligor so as to
enable the Primary Obligor to pay such indebtedness.
"Independent Consultant" shall mean Cathey, Hutton & Associates,
Inc.
"Independent Consultant's Report" shall mean a feasibility study
and report prepared by the Independent Consultant, at the sole cost and expense
of the Borrower, which report shall include an independent marketing study of
the Business Plan and review of the underlying assumptions supporting the
Business Plan, including an assessment of the likely competition the Borrower
may face.
"Investment" shall mean, as applied to any Person, any direct or
indirect purchase or other acquisition by that Person of securities, or of a
beneficial interest in securities, of any other Person, and any direct or
indirect loan, advance (other than deposits with financial institutions
available for withdrawal on demand, prepaid expenses, advances to employees,
officers and directors and similar items, each made or incurred in the ordinary
course of business), or capital contribution by that Person to any other
Person, including all Debt of such other Person, but excluding accounts owed by
that other Person in the
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<PAGE> 13
ordinary course of business. The amount of any Investment shall be determined
in conformity with GAAP.
"IRC" shall mean the Internal Revenue Code of 1986, as amended
from time to time, and the rules and regulations promulgated thereunder, and
any successor statutes or rules and regulations.
"IRS" shall mean the Internal Revenue Service or any successor
agency.
"Licenses" shall mean prior to the date of initial receipt of the
Operating Licenses, the Construction Permits, and thereafter, the Operating
Licenses.
"Lien" shall mean any mortgage, pledge, deed of trust,
assignment, lien, charge, encumbrance or security interest of any kind, or the
interest of a vendor or lessor under any conditional sale agreement, capital
lease or other title retention agreement, but excluding easements, rights of
way or similar encumbrances on the real property which are in the ordinary
course and which do not materially affect the value, use and insurability of
title of such real property.
"Loan" shall mean any Capital Loan or Equipment Loan, as
applicable.
"Loan Documents" shall mean all agreements, instruments and
documents, including, without limitation, security agreements, loan agreements,
notes, guarantees, mortgages, deeds of trust, subordination agreements,
pledges, powers of attorney, consents, assignments, contracts, notices, leases,
financing statements and all other written matter whether heretofore, now, or
hereafter executed by or on behalf of the Borrower and delivered to Lender,
together with all agreements and documents referred to therein or contemplated
thereby.
"Management Agreement" shall mean that certain RSA Management and
Construction Services Agreement dated as of October 15, 1993 between the
Borrower and Mercury.
"Material Adverse Effect" shall mean a material adverse effect
upon the condition (financial or otherwise), operations, properties or
prospects of the Borrower, or upon the ability of the Borrower to perform under
the Loan Documents.
"MCC" shall mean Mercury Communications Company, a Mississippi
corporation.
"Mercury" shall mean Mercury, Inc., a Louisiana corporation.
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<PAGE> 14
"Mortgages" shall mean (i) the mortgages and deeds of trust in
favor of Lender which have been executed on or prior to the date hereof and are
described in Schedule 1.01 hereto relating to the real property owned by the
Borrower and used in connection with the Business, and (ii) any mortgage or
deed of trust on any real property acquired by the Borrower subsequent to the
date hereof and used in connection with the Business which in accordance with
the terms of this Agreement is to be delivered to Lender by the Borrower as
security for the Obligations.
"Multiemployer Plan" shall mean a "multiemployer plan" as defined
in Section 4001(a)(3) of ERISA which is, or within the immediately preceding
six (6) years was, contributed to by either the Borrower or an ERISA Affiliate.
"Net Income" shall mean, for any period, the amount shown
opposite the caption, "Net Income" or a similar caption, on the Borrower's
statement of operations for such period prepared in accordance with GAAP.
"Note" shall mean either a Capital Note or an Equipment Note.
"Obligations" shall mean all of the obligations of the Borrower
now or hereafter existing under this Agreement or the other Loan Documents,
whether for principal, interest, fees, expenses, indemnification or otherwise.
"Operating Licenses" shall mean authorizations issued to the
Borrower by the FCC granting the Borrower the right to own and operate cellular
mobile telephone systems serving the Franchise Area on Frequency Block A.
"Operating Projections" shall mean (i) those certain operating
projections for years 1993 to 2003, inclusive, dated as of December 15, 1993,
and included in the Business Plan, with the assumption that for each fiscal
quarter of the Borrower in any fiscal year, Estimated Cash Flow for such fiscal
quarter shall equal one-quarter of Estimated Cash Flow for such fiscal year or
if delivered, then (ii) replacement quarterly operating projections
satisfactory to the Lender and delivered to the Lender by the Borrower on or
prior to January 15, 1994, which operating projections shall contain quarterly
information in sufficient detail to determine Estimated Cash Flow for the years
1993 to 2003, inclusive, provided that the sum of the Estimated Cash Flows for
the consecutive four quarters ending on December 31 of any calendar year shall
not be less than the annual Estimated Cash Flows in the operating projections
referred to in clause (i) above for such years.
"Payment Date" shall mean the last Business Day of March, June,
September and December in each year.
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<PAGE> 15
"PBGC" shall mean the Pension Benefit Guaranty Corporation
referred to and defined in ERISA.
"Permitted Capital Contributions" shall mean cash capital
contributions made by the Borrower's shareholders to the Borrower, which
contributions fully cure any defaults under Sections 8.01(r) and (s), not to
exceed four consecutive quarterly such contributions or eight such
contributions in the aggregate.
"Permitted Liens" shall have the meaning set forth in Section
6.01.
"Person" shall mean any natural person, corporation, division of
a corporation, business trust, joint venture, association, company,
partnership, unincorporated organization or other legal entity, or a government
or any agency or political subdivision thereof.
"Plan" shall mean any employee benefit plan as defined in Section
3(3) of ERISA (other than a Multiemployer Plan) in respect of which Borrower or
any ERISA Affiliate is, or within the immediately preceding six (6) years was,
an "employer" as defined in Section 3(5) of ERISA.
"Pledge Agreement" shall mean the Pledge Agreement executed by
each of the shareholders of Borrower, in the form of Exhibit B attached hereto,
to be executed and delivered pursuant to Section 4.01(f) hereof.
"Prepayment Premium" shall mean, with respect to (i) any Loan
bearing interest at the Fixed Rate, 1.0% of the outstanding principal balance
of such Loan, plus the amount, which shall not be less than zero, by which (a)
the present value of the remaining scheduled payments of principal and interest
discounted at a rate equal to the sum of (x) the "ask yield" to maturity of the
United States Treasury Note with a maturity closest to the maturity of the Note
evidencing such Loan as quoted in the Eastern Edition of The Wall Street
Journal (or any successor publication) on the date two (2) Business Days prior
to the making of the prepayment in question, and (y) 1.0% exceeds (b) the
outstanding principal balance of such Loan, and (ii) for any Loan bearing
interest at the Variable Rate, 1.0% of the outstanding principal balance of
such Loan.
"Pro Forma" shall have the meaning specified in Section 3.03.
"PUC" shall mean the Mississippi Public Service Commission or any
successor agency, and any successor, in whole or in part, to its jurisdiction.
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<PAGE> 16
"Purchase Agreement" shall mean that certain General Agreement
for Purchase of Cellular Systems between MCC and AT&T and executed July 7, 1993
by MCC and July 9, 1993 by AT&T.
"Release" shall mean release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor environment or into or out of any property, including the
movement of Contaminants through or in the air, soil, surface water,
groundwater or property.
"Remedial Action" shall mean actions required to (1) clean up,
remove, treat or in any other way address Contaminants in the indoor or outdoor
environment; (2) prevent the Release or threat of Release or minimize the
further Release of Contaminants so they do not migrate or endanger or threaten
to endanger public health or welfare or the indoor or outdoor environment; or
(3) perform pre-remedial studies and investigations and post-remedial
monitoring and care.
"Reportable Event" shall mean any reportable event as defined in
Section 4043 of ERISA.
"Shareholders Agreement" means that certain Shareholders
Agreement dated as of December 19, 1992 among each of the shareholders of the
Borrower and the Borrower.
"System" shall mean the complete mobile telephone system being
purchased, leased or installed by or for the Borrower for the Franchise Area
and all replacements, enhancements or additions thereto.
"Termination Event" shall mean (i) a Reportable Event with
respect to any Benefit Plan; (ii) the withdrawal of the Borrower or any ERISA
Affiliate from a Benefit Plan during a plan year in which Borrower or such
ERISA Affiliate was a "substantial employer" as defined in Section 4001(a)(2)
of ERISA; (iii) the imposition of an obligation on the Borrower or any ERISA
Affiliate under Section 4041 of ERISA to provide affected parties written
notice of intent to terminate a Benefit Plan in a distress termination
described in Section 4041(c) of ERISA; (iv) the institution by the PBGC of
proceedings to terminate a Benefit Plan; (v) any event or condition which might
constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Benefit Plan; or (vi) the partial
or complete withdrawal of the Borrower or any ERISA Affiliate from a
Multiemployer Plan.
"Variable Rate" shall mean with respect to each Variable Rate
Note, the average offering rate by commercial paper dealers for three month
commercial paper of major corporations as
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<PAGE> 17
quoted in the Eastern Edition of The Wall Street Journal (or its successor
publication) (i) in effect two (2) Business Days prior to the date of issuance
of such Variable Rate Note with respect to the period commencing on such date
of issuance and ending on the last day of the calendar quarter in which the
date of issuance occurs, and (ii) in effect two (2) Business Days prior to the
first day of each subsequent calendar quarter with respect to the period
commencing on such first day and ending on the last day of such subsequent
calendar quarter, plus, in each case, the Applicable Margin.
"Variable Rate Note" shall mean a Note which bears interest at a
variable rate pursuant to Section 2.05.
"Voting Stock" shall mean securities of any class or classes of a
corporation, the holders of which are ordinarily, in the absence of
contingencies, entitled to elect a majority of the corporate directors (or
Persons performing similar functions).
SECTION 1.02. Accounting Terms. Except as otherwise herein
specifically provided, each accounting term used herein shall have the meaning
given to it under generally accepted accounting principles applied on a
consistent basis ("GAAP").
SECTION 1.03. Others Defined in New Jersey Uniform Commercial
Code. All other terms contained in this Agreement (and which are not otherwise
specifically defined herein) shall have the meanings provided by the Uniform
Commercial Code of the State of New Jersey (the "Code") to the extent the same
are used or defined therein.
ARTICLE II
LOANS
SECTION 2.01. Agreement to Lend. Subject to the terms and
conditions and relying upon the representations and warranties of the Borrower
herein (unless the Commitment of Lender shall have been terminated in
accordance with the terms hereof), Lender agrees to make the following Loans to
the Borrower: (a) from time to time on or after the Effective Date and until
the Commitment Termination Date, Capital Loans up to (but not exceeding) the
Capital Loan Commitment Amount; and (b) from time to time on or after the
Effective Date and until the Commitment Termination Date, Equipment Loans up to
(but not exceeding) the Equipment Loan Commitment Amount.
SECTION 2.02. Equipment Loan(s). Equipment Loans shall be used to
purchase the Equipment on behalf of the Borrower and shall be paid by Lender,
on behalf of the Borrower, directly to AT&T. Lender shall make each such
Equipment Loan within 10 Business Days after Lender has received from the
Borrower a delivery and acceptance certificate in the form of Exhibit E
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<PAGE> 18
attached hereto, together with a copy of an invoice from AT&T for the Equipment
described in the delivery and acceptance certificate.
SECTION 2.03. Capital Loan(s); Procedure for Proper Request. (a)
The Capital Loans shall be used as working capital to operate the Business in
accordance with the Business Plan and to purchase equipment not manufactured by
AT&T or its affiliates, as described in the Business Plan. Proceeds of a
portion of initial Working Capital Loans may be used to pay the Borrower's
outstanding indebtedness of $514,474.99 of principal, plus accrued interest
thereon to Deposit Guaranty National Bank provided that such payment is made
directly by Lender to Deposit Guaranty National Bank pursuant to a disbursement
direction letter executed by the Borrower. Each Capital Loan shall be in a
minimum aggregate principal amount of $100,000 or in integral multiples thereof
(except for a Capital Loan which will be for the entire unused balance of the
Capital Loan Commitment Amount).
(b) The Borrower shall give Lender at least ten Business Days'
prior written notice of each Capital Loan requested to be made. In each case,
such notice shall be in the form attached hereto as Exhibit F, shall be
irrevocable and shall specify the aggregate amount of the proposed Capital
Loan, the intended use of such Capital Loan, the date of such Capital Loan
(which shall be a Business Day), whether such Capital Loan is to bear interest
at the Fixed Rate or the Variable Rate and the specific bank account (including
the identity of the bank and the account number) to which Lender shall transfer
the proceeds of the proposed Capital Loan. If any of the proceeds of the Loan
are to be used to purchase equipment, such notice shall also be accompanied by
a delivery and acceptance certificate in the form of Exhibit E attached hereto,
together with a copy of an invoice from the equipment vendor for the equipment
described in the delivery and acceptance certificate. Such notice, to be
effective, must be received by Lender not later than 10:00 a.m., New Jersey
time, on the tenth Business Day prior to the borrowing date specified in such
notice. Lender shall make the Loan proceeds available to the Borrower at the
bank account specified in a proper notice of borrowing on the date specified in
such notice of borrowing in U.S. dollars in immediately available funds.
SECTION 2.04. The Notes. Each Equipment Loan shall be evidenced
by an Equipment Note and each Capital Loan shall be evidenced by a Capital
Note. Each Note shall bear interest from its date on the outstanding principal
balance thereof as set forth in Section 2.05. Lender is hereby authorized by
the Borrower to endorse on the schedule attached to the applicable Note an
appropriate notation evidencing the date and amount of each payment on such
Loan and the other information provided for on such schedule; provided,
however, that the failure of Lender
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<PAGE> 19
to provide such endorsement, and other information on such Note or schedule
shall not in any manner affect the obligation of the Borrower to repay a Loan
in accordance with the terms of such Note. Upon the prior written request of
the Borrower delivered not more than sixty days and not less than thirty days
prior to the Commitment Termination Date and provided, further, that compliance
with such request does not require modification of any Mortgages, all of the
Fixed Rate Notes will be consolidated into a single Fixed Rate Note with a rate
of interest equal to the weighted average of the Fixed Rates of all of the
Fixed Rate Notes and scheduled payments of principal on the Payment Dates in
amounts equal to the aggregate principal amounts payable on the Payment Dates
under all of the Fixed Rate Notes and all of the Variable Rate Notes will be
consolidated into a single Variable Rate Note with a rate of interest equal to
the weighted average of the Variable Rates of all the Variable Rate Notes
subject to quarterly adjustment and scheduled payments of principal on the
Payment Dates in amounts equal to the aggregate principal amounts payable on
the Payment Dates under all of the Variable Rate Notes.
SECTION 2.05. Interest on Loans. (a) General. Subject to the
provisions of Section 2.07, each Loan shall bear interest at a rate per annum
equal to the Fixed Rate or the Variable Rate, computed on the basis of a 360
days year comprised of twelve 30 day months, compounded monthly. The Borrower
shall indicated which rate option it is selecting for each Loan on the delivery
and acceptance certificate or notice of borrowing delivered to the Lender in
accordance with Sections 2.02 or 2.03. Provided that no Event of Default has
occurred and is continuing, at one time prior to the fourth anniversary of the
Effective Date, Borrower may upon sixty days prior written notice to Lender,
which notice shall be irrevocable, convert one or more of the then outstanding
Variable Rate Loans, as specified in such notice, to Fixed Rate Loans.
(b) Variable Interest Rate. Subject to the provisions of Sections
2.05(a) and 2.07, each Loan for which the Borrower selects the Variable Rate
shall bear interest at the Variable Rate.
(c) Fixed Rate Election. Subject to the provisions of Section
2.07, each Loan for which the Borrower selects the Fixed Rate shall bear
interest at the Fixed Rate.
SECTION 2.06. Payments. (a) Interest on each Note shall be
payable quarterly in arrears on each Payment Date occurring after December 31,
1993, provided, however, that as long as no Event of Default has occurred and
is continuing, upon the prior written request of the Borrower, all but not less
than all, of the interest payable on the Notes on any Payment Date occurring on
or prior to the Commitment Termination Date, shall
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<PAGE> 20
be added to the principal balance of such Notes, solely to the extent that such
addition would not cause the outstanding principal balance of the Equipment
Notes to exceed the Equipment Loan Commitment Amount or the outstanding
principal balance of the Capital Notes to exceed the Capital Loan Commitment
Amount.
(b) The outstanding principal balance of each Note shall be
payable in twenty-two consecutive quarterly installments beginning on the
fifteenth Payment Date occurring after December 31, 1993. The amount of each
principal payment for any Note shall be calculated by multiplying the original
principal amount of such Note (including any deferred interest added to
principal pursuant to Section 2.06(a)) by the percent set forth below
corresponding to the applicable payment:
<TABLE>
<CAPTION>
% of Original Principal Amount
(including any deferred
Principal Payment Number interest)
- ------------------------ ------------------------------
<S> <C>
1 to 2 1.00%
3 to 6 1.90%
7 to 10 3.75%
11 to 14 4.75%
15 to 18 6.00%
19 to 22 8.10%
</TABLE>
SECTION 2.07. Default Rate of Interest. If the Borrower shall
default in the payment of the principal of or interest on any of the Loans or
any other amount becoming due hereunder on its due date, the Borrower shall
thereafter pay interest on all of the Loans at a rate that is 4% per annum
above the rates of interest otherwise payable on the Loans from the date such
payment is due to the date of actual payment. If any other Event of Default
shall occur and be continuing, then the Borrower shall, on demand, pay interest
on all of the Loans at a rate that is 2% per annum above the rates of interest
otherwise payable on the Loans from the date of the occurrence of such Event of
Default until the date such Event of Default has been cured.
SECTION 2.08. Optional Prepayment of Loans; Mandatory Prepayment
of Loans. (a) Provided that no Event of Default has occurred and is
continuing, the Borrower shall have the right upon the provision of sixty days
prior written notice to Lender, which notice shall be irrevocable, on any
Payment Date beginning with the fourteenth Payment Date after December 31, 1993
to prepay the outstanding principal balance of all, but not less than all, of
the Loans, together with accrued interest thereon and the aggregate Prepayment
Premiums with respect to all of the Loans.
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(b) Borrower shall prepay the principal outstanding balance of
the Loans in the inverse order of maturity on the Payment Dates occurring after
December 31, 1993 set forth below in the percentage amounts set forth below
solely out of Excess Cash Flow; provided, however, that if Excess Cash Flow is
insufficient to pay such percentage amounts in full, Borrower shall prepay only
those percentages of the principal outstanding balances of the Loans that may
be covered by Excess Cash Flow existing on the applicable Payment Dates, and if
there is any Excess Cash Flow remaining on any subsequent Payment Date after
giving effect to the required prepayment to be made on such Payment Date, such
Excess Cash Flow shall be applied to cover any shortfall in prepayments
required to be made on previous Payment Dates:
<TABLE>
<CAPTION>
% of Original Principal Amount of
Loans (including deferred interest)
Payment Dates to be Prepaid
------------- -----------------------------------
<S> <C>
11 to 12 7.00%
13 to 16 2.50%
17 to 20 1.35%
</TABLE>
(c) If the aggregate principal balance of (i) the Equipment Loans
exceeds the Equipment Loan Commitment Amount, or (ii) the Capital Loans exceeds
the Capital Loan Commitment Amount, then in each such case, the Borrower shall
immediately repay to Lender, upon notice from Lender, the amount by which the
outstanding principal balance of the respective Loan balance exceeds its
respective Commitment Amount, together with all accrued and unpaid interest on
such excess principal up to the date of repayment.
SECTION 2.09. Payment, etc. All payments by the Borrower
hereunder and under the Notes shall be made to Lender by wire transfer or other
electronic payment method to such bank accounts as Lender may designate, for
the account of Lender in U.S. dollars in immediately available funds by 2:00
p.m., New Jersey time, on the date on which such payment shall be due. Interest
in respect of any Loan hereunder shall accrue from the day such Loan is made up
to and including the day prior to the date on which such Loan is paid in full.
SECTION 2.10. Maximum Lawful Interest Rate. Notwithstanding any
provision contained herein, the total liability of the Borrower for payment of
interest pursuant hereto and the Notes, including any other charges or other
amounts, to the extent such charges and other amounts are deemed to be
interest, shall not exceed the maximum amount of such permitted by law to be
charged, collected, or received from the Borrower. If any payments by the
Borrower include interest in excess of such a maximum amount, Lender shall
apply such excess to the reduction
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of the unpaid principal amount due pursuant hereto, or if none is due, such
excess shall be refunded to the Borrower.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to Lender that:
SECTION 3.01. Organization; Powers. (a) The Borrower (i) is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Mississippi and (ii) is qualified to do business (A) in
the State of Mississippi and (B) in every other jurisdiction where such
qualification is necessary, except where the failure to qualify would not have
a Material Adverse Effect;
(b) the Borrower has the power and authority to own its
properties, to carry on its business as now conducted or as presently
contemplated and, to operate the System; and
(c) the Borrower has the power and authority to execute and
deliver and perform this Agreement and the other Loan Documents, to borrow
hereunder, and will have the power to execute and deliver any Mortgages and
collateral assignments of leases delivered subsequent to the-date hereof.
SECTION 3.02. Authorization by Borrower. The execution, delivery
and performance of this Agreement and the other Loan Documents to be delivered
subsequent to the date hereof, and the Loans hereunder:
(a) have been duly authorized by Borrower's Board of Directors
and, if necessary, Borrower's stockholders;
(b) do not violate (i) any provision of law, (ii) Borrower's
Articles of Incorporation or by-laws, (iii) any applicable order of any court
or other governmental agency, or (iv) any indenture, agreement for borrowed
money, bond, note or other similar instrument or any other material agreement
to which the Borrower is a party or by which the Borrower or any of the
Borrower's property is bound;
(c) do not conflict with, result in a breach of or constitute
(with due notice or lapse of time or both) a default under any indenture,
agreement for borrowed money, bond, note or similar instrument or other
material agreement to which the Borrower is a party or by which the Borrower or
any of the Borrower's property is bound;
(d) do not result in the creation or imposition of any Lien of
any nature whatsoever upon any property or assets of the
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<PAGE> 23
Borrower other than the Lien granted pursuant to ARTICLE VII hereof;
(e) constitute legal, valid and binding obligations of the
Borrower, enforceable against the Borrower in accordance with their respective
terms, subject, as to enforcement, to applicable bankruptcy, reorganization,
insolvency and similar laws affecting creditors' rights generally and to
moratorium laws from time to time in effect; and
(f) do not, as of the execution hereof, require any governmental
consent, filing, registration or approval except as set forth on Schedule 3.02.
SECTION 3.03. Financial Statements. The Borrower has furnished to
Lender the pro forma balance sheet (the "Pro Formal") of the Borrower dated as
of November 30, 1993 attached hereto as Exhibit G. As of the date of this
Agreement, (a) the Pro Forma fairly represents Borrower's assets, liabilities
and financial condition and indicates the equity contributions made by the
Borrower's shareholders; and (b) there are no omissions from the Pro Forma or
any other facts or circumstances not reflected in the Pro Forma which are or
may be material according to GAAP.
SECTION 3.04. No Material Adverse Change. There has been no
material adverse change in the condition (financial or otherwise), operations,
properties or prospects of the Borrower since the date of the Pro Forma.
SECTION 3.05. Litigation. Except as set forth on Schedule 3.05,
there are no actions, suits or proceedings at law or in equity or by or before
any governmental instrumentality or other agency now pending or, to the
knowledge of the Borrower, threatened against or affecting the Borrower or any
property or rights of the Borrower as to which there is a reasonable
possibility of an adverse determination and which, if adversely determined,
would individually or in the aggregate materially impair the right of the
Borrower to carry on business substantially as now being conducted or as
presently contemplated or would result in any Material Adverse Effect.
SECTION 3.06. Tax Returns. The Borrower has filed or caused to be
filed all Federal, state and local tax returns which are required to be filed
and has paid or caused to be paid all taxes as shown on such returns or on any
assessment received by it to the extent that such taxes have become due, except
such taxes the amount, applicability or validity of which are being contested
in good faith by appropriate proceedings and with respect to which the Borrower
shall have set aside on its books adequate reserves with respect to such taxes
as are required by GAAP.
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<PAGE> 24
SECTION 3.07. No Defaults. The Borrower is not in default (i)
with respect to any judgment, writ, injunction, decree, rule or regulation of
any governmental instrumentality or other agency which could have a Material
Adverse Effect, or (ii) in the performance, observance or fulfillment of any of
the obligations, covenants or conditions contained in any material agreement or
instrument to which the Borrower is a party or by which its assets are bound.
SECTION 3.08. Properties. The Borrower has good and marketable
title to all its properties and assets and all Collateral is free and clear of
all Liens of any nature whatsoever, except Permitted Liens and except that
Accounts are subject to billing adjustments and writeoffs in the ordinary
course of business.
SECTION 3.09. Licenses, etc. The Borrower has obtained the
Operating Licenses, the Certificate and all necessary construction and other
licenses, authorizations and approvals of any Federal, state or local
governmental agency, authority or instrumentality having jurisdiction over the
Borrower, the Franchise or the Franchise Area, which other licenses,
authorizations and approvals are necessary or appropriate for the construction
and operation of cellular mobile telephone systems in the Franchise Area as
presently contemplated.
SECTION 3.10. Compliance With Laws. Except as disclosed on
Schedule 3.10, the operations of the Borrower comply in all material respects
with all applicable federal, state or local laws and regulations, including
environmental, health and safety statutes and regulations. None of the
operations of the Borrower is subject to any judicial or administrative
proceeding alleging the violation of any federal, state or local environmental,
health or safety statute or regulation. None of the operations of the Borrower
is the subject of federal or state investigation evaluating whether any
remedial action is needed to respond to a Release of any contaminant into the
indoor or outdoor environment. Except as disclosed on Schedule 3.10, the
Borrower has not filed any notice under any federal or state law indicating
past or present treatment, storage or disposal of a hazardous waste or
reporting a Release of any Contaminant into the indoor or outdoor environment.
Borrower has no contingent liability of which the Borrower has knowledge or
reasonably should have knowledge in connection with any Release of any
Contaminant into the indoor or outdoor environment.
SECTION 3.11. ERISA. Neither Borrower nor any ERISA Affiliate
maintains or contributes to any Plan other than a Plan listed on Schedule 3.11
hereto. Each Plan which is intended to be qualified under Section 401(a) of the
IRC has been determined by the IRS to be so qualified, and each trust related
to any such
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<PAGE> 25
Plan has been determined to be exempt from federal income tax under Section
501(a) of the IRC. Except as disclosed on Schedule 3.11, neither Borrower nor
any ERISA Affiliate maintains or contributes to any employee welfare benefit
plan within the meaning of Section 3(1) of ERISA which provides benefits to
employees after termination of employment other than as required by Section 601
of ERISA. Neither the Borrower nor any ERISA affiliate has breached any of the
responsibilities, obligations or duties imposed on it by ERISA or regulations
promulgated thereunder with respect to any Plan. No Plan has incurred any
accumulated funding deficiency (as defined in Section 302(a)(2) of ERISA and
Section 412(a) of the IRC), whether waived or not waived. Neither the Borrower
nor any ERISA Affiliate nor any fiduciary of any Plan which is not a
Multiemployer Plan (i) has engaged in a nonexempt "prohibited transaction"
described in Section 406 of ERISA or Section 4975 of the IRC or (ii) has taken
or failed to take any action which would constitute or result in a Termination
Event. Neither the Borrower nor any ERISA Affiliate has incurred any liability
to the PBGC which remains outstanding other than the payment of premiums, and
there are no premium payments which have become due which are unpaid. Schedule
B to the most recent annual report filed with the Internal Revenue Service with
respect to each Plan is complete and accurate. Since the date of each such
Schedule B, there has been no adverse change in the funding status or financial
condition of the Plan relating to such Schedule B. Neither the Borrower nor any
ERISA Affiliate has (i) failed to make a required contribution or payment to a
Multiemployer Plan or (ii) made a complete or partial withdrawal under Sections
4203 or 4205 of ERISA from a Multiemployer Plan. Neither the Borrower nor any
ERISA Affiliate has failed to make a required installment or any other required
payment under Section 412 of the IRC on or before the due date for such
installment or other payment. Neither the Borrower nor any ERISA Affiliate is
required to provide security to a Plan under Section 401(a)(29) of the IRC due
to a Plan amendment that results in an increase in current liability for the
plan year.
SECTION 3.12. Investment Company Act; Public Utility Holding
Company Act. The Borrower is not an "investment company" as that term is
defined in, and is not otherwise subject to regulation under, the Investment
Company Act of 1940. The Borrower is not a "holding company" as that term is
defined in, and is not otherwise subject to regulation under, the Public
Utility Holding Company Act of 1935.
SECTION 3.13. Federal Reserve Regulations. The Borrower is not
engaged principally, or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying any margin stock
(within the meaning of Regulation G of the Board of Governors of the Federal
Reserve System of the United States), and no part of the proceeds of the Loans
hereunder will be used to purchase or carry any such margin
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<PAGE> 26
stock or to extend credit to others for the purpose of purchasing or carrying
any such margin stock or for any purpose that violates, or is inconsistent
with, the provisions of Regulation G, T, U or X of said board of Governors.
SECTION 3.14. Collateral. The security interest granted by
Article VII hereof and accompanying financing statements, when duly filed in
the offices and jurisdictions set forth on Schedule 3.14 hereof, create a valid
and perfected first priority Lien in and to the Collateral to the extent that
the filing of a financing statement is sufficient to perfect such security
interest, enforceable against other Persons in all jurisdictions securing the
payment of the Obligations. Upon filing such financing statements, no further
action is required to perfect fully the Lien of Lender in the Collateral
described in Section 7.01.
SECTION 3.15 Chief Place of Business. As of the execution hereof,
the principal place of business of the Borrower is located at 1321 AA Sunset
Drive, Grenada, Mississippi 38901 and the chief executive office of the
Borrower is located at 14th Floor, Calcasieu Marine National Bank, One
Lakeshore Drive, Lake Charles, Louisiana 76061. If any change in such location
occurs, the Borrower shall notify Lender thereof not later than ten days after
the occurrence thereof. As of the execution hereof, the books and records of
Borrower and all chattel paper and all records of account are located at the
principal place of business and chief executive office of the Borrower, and if
any change in such location occurs, the Borrower shall notify Lender thereof
not later than ten days after the occurrence thereof.
SECTION 3.16 Other Corporate Names. The Borrower has not used any
other corporate or fictitious name other than the corporate name shown in
Borrower's Articles of Incorporation and Cellular One.
SECTION 3.17 Insurance. Schedule 3.17 contains a description of
all insurance which the Borrower maintains with respect to the Business. All of
such insurance is in full force and effect.
SECTION 3.18. Business Plan and operating Projections. The
Business Plan and operating Projections represent the Borrower's best estimate
of the Borrower's future financial performance for the periods set forth
therein. Such documents have been prepared on the basis of the assumptions set
forth therein, which the Borrower believes are reasonable in light of current
and reasonably foreseeable business conditions.
SECTION 3.19. Capitalization and Subsidiaries. Borrower has one
class of capital stock comprised of common stock, with a par value of $.01.
There are 100,000 authorized
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<PAGE> 27
shares of which 10,000 shares are outstanding. All of the outstanding shares of
capital stock of the Borrower are duly and validly issued, fully paid and
nonassessable, and none of such issued and outstanding shares, equity
securities or beneficial interests has been issued in violation of, or is
subject to, any pre-emptive or subscription rights. There are no: (A)
outstanding shares of capital stock or other securities convertible into or
exchangeable for equity securities of the Borrower, or (B) outstanding rights
of subscription, warrants, calls, options, contracts or other agreements of any
kind, issued, made or granted to or with any Person under which the Borrower
may be obligated to issue, sell, purchase, retire or redeem or otherwise
acquire or dispose of any equity securities of the Borrower. The ownership
interests in the Borrower are as indicated on Exhibit A to the Pledge
Agreement.
SECTION 3.20. Real Property, Leases and Easements. As of the date
of the initial Loans, the Borrower owns the real property described on Schedule
3.20. Set forth on Schedule 3.20 is a list of (i) all real property leased by
the Borrower (the "Leased Real Property") and the material terms and provisions
thereof and (ii) all easements, rights of way and similar rights with respect
to real property granted to the Borrower (the "Easements") and the material
terms and provisions thereof. Except as set forth in Schedule 3.20, the
Borrower's interests in the owned real property, the Leased Property and the
Easements (i) are sufficient in order for the Borrower to conduct its business
and operations as presently conducted and (ii) are duly recorded and perfected
in all necessary and appropriate recording and filing offices. Schedule 3.20
sets forth a list of real property and Easements that the Borrower is currently
intending to purchase or lease in connection with its operations and business.
SECTION 3.21. No Material Misstatements. No report, financial
statement, exhibit or schedule furnished by or on behalf of the Borrower to
Lender in connection with the negotiation of this Agreement and the other Loan
Documents or included herein or therein, nor any other information required to
be furnished hereby or thereby, contains any material misstatement of fact or
omits to state any material fact necessary to make the statements therein not
materially misleading.
ARTICLE IV
CONDITIONS FOR LOANS
The obligations of Lender to make Loans hereunder are subject to
the accuracy, as of the Effective Date, of the representations and warranties
contained in Article III, to the performance by the Borrower of its obligations
to be performed
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<PAGE> 28
hereunder on or before the date of such Loan and to the satisfaction of the
following further conditions:
SECTION 4.01. Conditions Precedent to Initial Loan. In the case
of the initial Loan to be made hereunder:
(a) All then applicable legal matters incident to this Agreement
and the other Loan Documents shall be satisfactory to counsel for Lender.
(b) Lender shall have received (i) the Business Plan and
Operating Projections showing in reasonable detail and specifying any material
underlying assumptions, for the subsequent 10 year period, the Borrower's
anticipated revenues and expenses and projected statements of Cash Flow and
information with respect to projected capital expenditures and changes in
working capital over such period and (ii) a detailed System construction and
buildout schedule.
(c) Lender shall have received the Pro Forma.
(d) Lender shall have received a certificate substantially in the
form of Exhibit H hereto, dated the Effective Date of the secretary of the
Borrower, certifying (i) the names and true signatures of the officers
authorized to sign each Loan Document to which the Borrower is a party, (ii)
the resolutions of the Board of Directors of the Borrower approving the
transactions contemplated by the Loan Documents, and (iii) the Borrower's
by-laws.
(e) Lender shall have received the favorable written opinion of
special, local and regulatory counsel for the Borrower, dated the Effective
Date, addressed to Lender and satisfactory to (and containing only such
qualifications and limitations as are satisfactory to) counsel for Lender,
which opinion shall be substantially in the form of Exhibit I-1; I-2 and I-3
attached hereto.
(f) Lender shall have received the Pledge Agreement duly executed
by each of the shareholders of Borrower.
(g) Lender shall have received the Mortgage[s] for the premises
described on Schedule 1.01 together with a lender's title commitment or policy
therefor, satisfactory to Lender.
(h) Lender shall have received certificates of appropriate public
officials of Mississippi, dated not more than 30 days prior to the Effective
Date, as to the legal existence or qualification, and good standing of the
Borrower.
(i) Lender shall have received the Borrower's Articles of
Incorporation, as amended, modified or supplemented to the
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<PAGE> 29
Effective Date, certified to be true, correct and complete by the Secretary of
State of Mississippi.
(j) Lender shall have received satisfactory evidence that its
security interests in the Collateral have been properly perfected and
constitute first and prior security interests subject only to Permitted Liens.
(k) Lender shall have received loss payable endorsements
substantially in the form of Exhibit J attached hereto with respect to
Borrower's insurance policies relating to the Collateral, and insurance
certificates from nationally recognized insurance brokers with respect to
Borrower's insurance policies.
(l) Lender shall have completed an environmental audit of
Borrower's owned and leased real property to the satisfaction of Lender.
(m) Lender shall have received with respect to each of Borrower's
then existing "Collection Accounts" (as defined in Section 7.04), Restricted
Account Agreements substantially in the form of Exhibit K attached hereto, duly
executed by Borrower and the financial institutions maintaining the "Collection
Accounts".
(n) Lender shall have received a landlord waiver substantially in
the form of Exhibit L attached hereto and a collateral assignment of lease in
form and substance satisfactory to Lender with respect to each of the
Borrower's leased premises, each such document duly executed by the landlord of
each such premises and each collateral assignment of lease duly executed by the
Borrower.
(o) Lender shall have received a letter from Borrower
substantially in the form of Exhibit M attached hereto.
(p) Lender shall have received the Independent Consultant's
Report, which shall be in form and substance satisfactory to Lender.
(q) Lender shall have received satisfactory evidence that the
licenses, authorizations and approvals referred to in Section 3.09 have been
received by the Borrower.
(r) Lender shall have received the Borrower's most recent audited
and unaudited financial statements.
(s) Lender shall have received payment in full of the origination
fee of $124,753.
(t) Lender shall have received a subordination agreement in form
and substance satisfactory to it from the holders of Debt described in Section
6.11(v).
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<PAGE> 30
(u) Lender shall have satisfactorily completed its due diligence
review of the Business and the System.
(v) Lender shall have received satisfactory evidence that the
rights and obligations of MCC under the Purchase Agreement that relate to the
Equipment for the Franchise Area have been assigned to and assumed by the
Borrower,
(w) Lender shall have received a pay off letter from Deposit
Guaranty National Bank.
SECTION 4.02. Conditions Precedent to All Loans. In the case of
each Loan hereunder:
(a) The representations and warranties of the Borrower set forth
in Article III or in any other Loan Document shall be true and correct in all
material respects on and as of the date of such Loan with the same effect as
though such representations and warranties had been made on and as of such
date.
(b) At the time of each such Loan, and after giving effect to
such Loan, the Borrower shall be in compliance with all the terms and
provisions set forth herein on its part to be observed or performed, and no
Event of Default, nor any event which upon notice or lapse of time or both
would constitute such an Event of Default, shall have occurred and be
continuing.
(c) At the time of each such Loan and after giving effect to each
such Loan, there shall have been no material adverse change in the condition
(financial or otherwise), operations, properties or prospects of the Borrower
since the date of the Pro Forma.
(d) Such Loan, when combined with Loans previously made to the
Borrower, shall not exceed the Equipment Loan Commitment Amount or the Capital
Loan Commitment Amount, as applicable.
(e) All legal matters incident to such Loan and the Loan
Documents shall be satisfactory to counsel for Lender.
(f) Lender shall have received a notice of the Capital Loan as
required by Section 2.03(b) or acceptance certificate and invoices required by
Section 2.02, as applicable, together with a certification by an authorized
officer of the Borrower regarding representations, warranties, absence of
default, and with respect to Capital Loans, use of proceeds, all as set forth
on Exhibit E or F, as applicable.
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<PAGE> 31
(g) Lender shall have received a duly executed Note by the
Borrower for the amount of the Loan at least three Business Days prior to the
date the Loan is requested to be made.
(h) Lender shall have received satisfactory evidence from the
Engineer that the project milestones set forth in the Business Plan that are
scheduled to be achieved prior to the date of the Loan, including, without
limitation, System construction and subscriber and expense levels, have
actually been achieved.
ARTICLE V
AFFIRMATIVE COVENANTS
The Borrower covenants and agrees with Lender that so long as the
Agreement shall remain in effect or any Obligations hereunder or under any of
the other Loan Documents are unpaid:
SECTION 5.01 Corporate and Franchise Existence. The Borrower
shall preserve and maintain its corporate existence, rights, franchises and
privileges in its jurisdiction of its organization, and in all other
jurisdictions in which such qualification is necessary in view of its business
and operations and property and preserve, protect and keep in full force and
effect its material rights, the Licenses, the Certificate, other licenses
and the Franchise and do all things necessary to construct the System and
operate the Business in the Franchise Area.
SECTION 5.02 Compliance with Laws, Etc. The Borrower shall comply
with all laws and regulations applicable to it and all material contractual
obligations applicable to it.
SECTION 5.03 Maintenance of Properties. The Borrower shall at all
times maintain in good repair, working order and condition, excepting ordinary
wear and tear, all of its properties material to its operations and make all
appropriate repairs, replacements and renewals thereof, in each case consistent
with prudent industry practices and sound business judgment and with respect to
the maintenance of machinery and equipment, in compliance with applicable
government regulations, manufacturers' warranty requests and any licensing
requirements.
SECTION 5.04. Insurance. The Borrower shall at its own expense,
with insurers and with maximum deductibles satisfactory to Lender:
(a) keep its insurable properties, including the Equipment, real
property and other tangible Collateral, adequately insured on an all-risk basis
for the full replacement value thereof at all times;
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<PAGE> 32
(b) maintain in full force and effect public liability insurance
against claims for personal injury or death or property damage occurring upon,
in, about or in connection with the use of any properties owned, occupied or
controlled by the Borrower, in such amount as Lender shall reasonably deem
necessary;
(c) maintain such other insurance to such extent and against such
risks, including against business interruptions, fire and other risks insured
against by extended coverage, as is satisfactory to Lender;
(d) cause each insurance policy pertaining to the Collateral to
(i) name Lender and AT&T and their respective affiliates (all of the foregoing
are hereinafter referred to as the "Additional Insureds") as an "additional
insured" if such policy is a liability policy, (ii) name each of the Additional
Insureds as a "loss payee" and include a standard lender's loss payable
endorsement in favor of each of the Additional Insureds substantially in the
form of Exhibit J if such policy is a property insurance policy, (iii) provide
that Lender shall be notified in writing of any proposed cancellation or
modification of such policy at least thirty (30) days in advance of such
proposed cancellation or modification and will have sufficient time to correct
any deficiencies justifying such proposed cancellation or modification,
(iv) provide that all insurance proceeds for losses shall be payable to each of
the Additional Insureds regardless of any omission or breach by the Borrower,
(v) waive any right of subrogation of the insurers against the Additional
Insureds and waive any right of the insurers to any setoff or counterclaim or
any other deduction, whether by attachment or otherwise, in respect of any
liability of the Borrower, and (vi) provide that such insurance shall be
primary insurance, that the insurers under such insurance policies shall be
liable under such policies without right of contribution from any other
insurance coverage and expressly provide that all provisions thereof, except
the limits of liability (which shall be applicable to all insureds as a group)
and liability for premiums (which shall be solely a liability of the Borrower),
shall operate in the same manner as if there were a separate policy covering
each insured; and
(e) on or prior to the renewal date of each policy deliver to
Lender copies of all policies or broker's certificates and loss payable
endorsements issued by the Borrower's insurers in respect of all policies and
endorsements, as renewed. Each such policy, certificate and endorsement shall
be accompanied by a statement from the Borrower's insurance broker or insurance
agent stating whether, in the opinion of such broker or agent, such policies
comply with the requirements of this Section 5.04, that all premiums due
thereon have been paid and that upon the renewal date, such policy shall be in
full force and effect.
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In addition to the foregoing, the Borrower shall at all times
maintain insurance with respect to the Collateral (but not self-insurance or
insurance subsidiaries) that is customarily maintained in the industry.
SECTION 5.05. Obligations and Taxes. The Borrower shall pay all
of its indebtedness and obligations promptly and in accordance with their terms
and pay and discharge promptly all taxes, assessments and governmental charges
or levies imposed upon it or upon its income or profits or in respect of its
property, before the same shall become in default, as well as all lawful claims
for labor, materials and supplies or otherwise which, if unpaid, might become a
Lien upon such properties or any part thereof; provided, however, that the
Borrower shall not be required to pay and discharge or to cause to be paid and
discharged any such tax, assessment, charge, levy or claim so long as the
validity or amount thereof shall be contested in good faith by appropriate
proceedings diligently pursued, and the Borrower shall set aside on its books
such reserves as are required by GAAP with respect to any such tax, assessment,
charge, levy or claim so contested.
SECTION 5.06. Financial Statements, Reports, etc. The Borrower
shall furnish to Lender:
(a) within ninety (90) days after the end of each fiscal year of
Borrower, annual audited consolidated financial statements for the Borrower,
including the balance sheets and statements of operations, stockholders' equity
and cash flows, for such fiscal year, which financial statements shall have
been audited by independent certified public accountants (which may be.regional
or local certified public accountants) satisfactory to Lender, and shall be
prepared in accordance with GAAP, and accompanied by such independent certified
public accountant's unqualified opinion;
(b) within forty-five (45) days after the end of each of the
first three fiscal quarters of each fiscal year, unaudited balance sheets and
statements of operations, stockholders' equity and cash flows of the Borrower
as of the end of each such quarter and for the then elapsed portion of the
fiscal year;
(c) concurrently with (a) and (b) above, a certificate of
Borrower's independent certified public accountant or the Borrower's chief
financial officer, as applicable, to the effect that the financial statements
referred to in clause (a) or (b) above, present fairly the financial position
and results of operations of the Borrower and as having been prepared in
accordance with GAAP consistently applied, in each case subject to normal
year-end audit adjustments except for the statements referred to in clause (a)
above;
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(d) all material agreements or licenses affecting the Licenses,
the Certificate, the System or the Franchise prior to any execution, or
material amendment thereto;
(e) promptly upon their becoming available, copies of any
periodic or special documents, statements or other information filed by
Borrower with the FCC, the PUC or with any other federal, state or local
governmental agency or authority in connection with the construction and/or
operation of the System in the Franchise Area or with respect to the
transactions contemplated by any of the Loan Documents, and copies of any
material notices and other material communications from the FCC, the PUC or
from any other federal, state or local governmental agency or authority;
(f) immediately upon any officer or employee of the Borrower
obtaining knowledge of any condition or event (i) which either constitutes an
Event of Default or which, after notice or lapse of time or both, would
constitute an Event of Default, (ii) which renders any representation, covenant
or warranty contained herein materially false or misleading, or (iii) which
would result in Borrower's financial results for any monthly, quarterly or
annual period to materially deviate from the financial results projected for
such period in the Business Plan or the operating budget described in clause (m)
below, a certificate signed by an authorized officer of the Borrower specifying
in reasonable detail the nature and period of existence thereof and what
corrective action Borrower has taken or proposes to take with respect thereto;
(g) within ninety (90) days after the end of each fiscal year of
the Borrower, a certificate signed by an authorized officer of the Borrower,
stating that there does not exist any condition or event which either
constitutes an Event of Default or which, after notice or lapse of time or
both, would constitute an Event of Default, or which constitutes a breach of
any covenant hereunder;
(h) within thirty (30) days of the end of each fiscal year of the
Borrower, a certificate signed by an authorized officer of the Borrower setting
forth (x) all the Easements, licenses, rights of way and other similar
interests in real property acquired by the Borrower in the preceding year and
(y) a summary of all information and documents provided to Lender or requited
to be provided to Lender pursuant to Sections 5.16 and 5.17 hereof;
(i) within fifteen (15) days after the end of each month, a
report showing Borrower's revenues and expenses in reasonable detail for such
month in the form of Exhibit N attached hereto;
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(j) evidence in the manner set forth in Section 5.04(e) of
insurance complying with Section 5.04;
(k) until completion of the System, within ten (10) days after
the end of each month, a report in form and substance satisfactory to Lender
setting forth Borrower's progress in completing the System, and comparing such
progress to the schedule set forth in the Business Plan;
(l) within thirty (30) days after the end of each quarter,
detailed operating information with respect to matters including but not
limited to number and type of connections, revenues per connection type, number
of customers and services utilized, types of capital expenditures, and other
material information in the form of Exhibit 0 attached hereto;
(m) within thirty (30) days after the beginning of each fiscal
year of Borrower, an operating budget for such fiscal year;
(n) promptly from time to time such other information regarding
the operations, business affairs and condition (financial or otherwise) of the
Borrower or the Business as Lender may reasonably request; and
(o) promptly after receipt thereof, copies of all monthly
statements from each Collection Agent which does not send such statements to
the Lender on a monthly basis, certified as being true and complete by the
chief financial officer of the Borrower, with such certification to be duly
notarized.
SECTION 5.07. Litigation and Other Notices. The Borrower shall
give Lender prompt written notice of the following: (a) all events of default
or any event that would become an event of default upon notice or lapse of time
or both under any of the terms or provisions of any note, or of any other
evidence of indebtedness or agreement or contract governing the borrowing of
money, of Borrower; (b) any levy, attachment, execution or other process
against any of the property or assets, real or personal, of the Borrower; (c)
the filing or commencement of any action, suit or proceeding by or before any
court or any Federal, state, municipal or other governmental department,
commission, instrumentality or agency which, if adversely determined against
Borrower, would materially impair the right of Borrower to carry on the
Business substantially as now conducted or contemplated or result in a Material
Adverse Effect; (d) any notice, letter or other correspondence, oral inquiry,
communication or request of any kind from the FCC or the PUC relating to the
Licenses, Certificate, Franchise or System; and (e) any matter which has
resulted in, or which Borrower reasonably believes will result in, a Material
Adverse Effect.
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SECTION 5.08. Mortgages and Landlord Consents. As security for
the Obligations, the Borrower shall promptly execute and deliver to Lender
Mortgages in favor of Lender with respect to any real property purchased by the
Borrower, together with lender's title policies for such real property
satisfactory to Lender, and landlord waivers and collateral assignments of
lease satisfactory to Lender with respect to any real property leased by the
Borrower, together with appropriate consents of the applicable landlords. With
respect to all such owned and leased property, the Borrower shall, at the time
of acquisition thereof, conduct at the Borrower's sole cost and expense,
environmental audits satisfactory to Lender.
SECTION 5.09. ERISA. The Borrower shall comply in all material
respects with the applicable provisions of ERISA and furnish to Lender, (i) as
soon as possible, and in any event within 30 days after the Borrower or any
officer of the Borrower knows or has reason to know that any Reportable Event
with respect to any Plan has occurred or any Termination Event has occurred, a
statement of an officer of the Borrower setting forth details as to such
Reportable Event or Termination Event and the corrective action that the
Borrower proposes to take with respect thereto, together with a copy of the
notice of any such Reportable Event given to the PBGC, and (ii) promptly after
receipt thereof, a copy of any notice Borrower may receive from the PBGC
relating to the intention of the PBGC to terminate any Plan or to appoint a
trustee to administer any such Plan.
SECTION 5.10. Access to Premises and Records. The Borrower shall
permit representatives of Lender to have access to the Borrower's books and
records and to the Collateral and the premises of Borrower at reasonable times
upon reasonable notice and to make such excerpts from such records as such
representatives deem necessary and to inspect the Collateral.
SECTION 5.11. Design and Construction. The Borrower shall design,
construct, equip and operate the System as previously disclosed to Lender in
the Business Plan and in accordance with prudent industry standards.
SECTION 5.12. Environmental Notices. If the Borrower shall (a)
receive notice that any violation of any federal, state or local environmental
law or regulation may have been committed or is about to be committed by the
Borrower, (b) receive notice that any administrative or judicial complaint or
order has been filed or is about to be filed against the Borrower alleging
violations of any federal, state or local environmental law or regulation or
requiring the Borrower to take any action in connection with any Release of any
Contaminant into the indoor or outdoor environment, or (c) receive any notice
from a federal, state, or local governmental agency or private party alleging
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that the Borrower may be liable or responsible for costs associated with a
response to or cleanup of a Release of any Contaminant into the indoor or
outdoor environment or any damages caused thereby, Borrower shall provide
Lender with a copy of such notice within five (5) Business Days of Borrower's
receipt thereof. Within five (5) Business Days of the Borrower having learned
of the enactment or promulgation of any federal, state or local environmental
law/or regulation which may result in any Material Adverse Effect, the Borrower
shall provide Lender with notice thereof.
5.13. Amendment of Organization Document. The Borrower shall
notify Lender of any amendment to its Articles of Incorporation within ten days
of the occurrence of any such event, and provide Lender with copies of any
amendments certified by the secretary of the Borrower and of all other relevant
documentation. Borrower shall promptly deliver to Lender such financing
statements executed by the Borrower which Lender may request as a result of any
such event.
5.14. Engineer and Independent Consultant. The Borrower shall
permit the Engineer to visit and inspect any of the properties and operations
of the Borrower relating to the System and any materials to be used in
connection with the System, and to examine the books of account and other
documents of Borrower and make copies thereof and discuss the affairs, finances
and the accounts of Borrower, the construction of the System and the Business
Plan, and be advised as to the same by Borrower and its officers. The Borrower
shall reimburse Lender for the out-of-pocket costs and expenses incurred by
Lender in connection with the retention of the Independent Consultant for the
preparation of the Independent Consultant's Report, the activities of the
Engineer described above and the confirmations of the Engineer pursuant to
Section 4.02 above.
SECTION 5.15. Changes in Regulation. The Borrower shall keep
Lender informed on a timely basis as to (and shall respond on a timely basis to
all requests by Lender for information with respect to) all prospective,
proposed, or actual changes in regulation of the Borrower or the Business or
any of the properties, operations or business of the Borrower by any Federal,
state or local authority, whether such changes are effected because of the
expansion of the properties, operations or business of the Borrower or by
effect of statutes, regulations, official interpretations thereof, judicial
decisions, orders or by consensual action between the Borrower and any
regulatory authority. In the event that Lender determines in its sole good
faith discretion that any of such proposed, prospective or actual changes have
or are reasonably likely to have a material adverse effect on AT&T or Lender or
any of their respective affiliates under the Loan Documents (including, without
limitation, the security interests provided
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to Lender under the Loan Documents), the Borrower and Lender shall cooperate in
good faith to restructure or reorganize, each at its own cost and expense
(unless an Event of Default has occurred and is continuing, in which event such
restructuring or reorganization shall be at the sole cost and expense of the
Borrower) the terms and provisions set forth in the Loan Documents and the
structure of the financing provided under the Loan Documents so as to minimize
or avoid the adverse effects to AT&T or Lender or any of their respective
affiliates of such proposed, prospective or actual changes.
SECTION 5.16. Fiscal Year. The Borrower shall at all times have a
fiscal year ending on December 31 of each calendar year.
SECTION 5.17. Further Assurances. The Borrower agrees to do such
further acts and things and to execute and deliver to Lender such additional
assignments, agreements, powers and instruments, at the Borrower's expense, as
Lender may reasonably require or deem advisable to carry into effect the
purposes of this Agreement and the other Loan Documents or to better assure and
confirm unto Lender its rights, powers and remedies hereunder and thereunder.
ARTICLE VI
NEGATIVE COVENANTS
The Borrower covenants and agrees with Lender that so long as
this Agreement shall remain in effect or the Obligations hereunder or under any
of the Loan Documents shall be unpaid, without the prior written consent of
Lender:
SECTION 6.01. Liens, etc. The Borrower shall not create, incur,
assume or suffer to exist, directly or indirectly, any Lien upon or with
respect to any of its properties or the Collateral, now owned or hereafter
acquired, or upon any income or profits therefrom except for the following
"Permitted Liens":
(i) Liens granted pursuant to the Loan Documents;
(ii) Liens for taxes, assessments or governmental charges or
levies on property of the Borrower if the same shall not at the time be
delinquent or thereafter can be paid without penalty, or are being
diligently contested in good faith and by appropriate proceedings and
for which the Borrower shall have set aside reserves on its books as
required by GAAP;
(iii) Liens imposed by law, such as carrier's, warehousemen's and
mechanic's liens and other similar liens,
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which arise in the ordinary course of business with respect to
obligations not yet due or being contested in good faith by appropriate
proceedings and for which the Borrower shall have set aside reserves on
its books as required by GAAP;
(iv) Liens arising out of pledges or deposits under workmen's
compensation laws, unemployment insurance, old age pensions, or other
social security benefits other than any Lien imposed by ERISA;
(v) Liens consisting of purchase money security interests or
arising from Guarantees or third party sales and leases not prohibited
by Section 6.05 hereof, in each case on mobile telephone terminals held
in inventory exclusively for sales to customers in the Franchise Area or
placed in service with customers in the Franchise Area; provided that
such security interest shall not be extended to any other property or
asset of Borrower other than proceeds from the sale of such mobile
telephone terminals as described in this paragraph;
(vi) Liens consisting of extensions or renewals of the Liens
referred to in subparagraph (v) of this Section, provided that the
indebtedness secured thereby shall not be increased pursuant to any such
extension or renewal and no such extension or renewal shall extend any
such Lien to any other property or asset of Borrower;
(vii) easements and rights of way with respect to real.property
owned by the Borrower and not interfering with the ordinary conduct of
the Business; and
(viii) deposits with respect to leases not prohibited by this
Agreement and with respect to performance for bids, in each case in the
ordinary course of business.
SECTION 6.02. Use of Proceeds. The Borrower shall not use the
proceeds of any Equipment Loan for any purpose other than purchasing Equipment
for use in the Franchise Area and shall not use the proceeds of any Capital
Loan for any purposes other than those set forth in Section 2.03(a).
SECTION 6.03. Sale of Assets, Consolidation, Merger, etc. The
Borrower shall not consolidate with or merge into any other Person, sell,
lease, transfer or otherwise dispose of the Collateral, except for sales of
inventory in the ordinary course of business and except for sales of NovAtel
and Plexus equipment owned by the Borrower on the Effective Date, provided that
the proceeds of such sales will be used by the Borrower for working capital
purposes.
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SECTION 6.04. Dividends; Distribution of Assets; Certain Debt.
The Borrower shall not purchase, redeem or otherwise acquire any interest of
the Borrower, declare or pay any dividends in any fiscal year on any class or
classes of stock, return capital of Borrower to its shareholders, make any
other distribution on or in respect of any shares of any class of capital stock
of Borrower, or make any payments of principal, interest, fees or other charges
with respect to the Debt described in Section 6.11(v).
SECTION 6.05. Guarantees; Third-Party Sales and Leases. The
Borrower shall not directly or indirectly (i) assume any obligation or
indebtedness of another Person, (ii) make or assume any Guarantee, or (iii)
finance any third-party sales or leases, except third-party sales or leases
with respect to mobile telephone terminals placed in service with a customer in
the Franchise Area.
SECTION 6.06. Investments. The Borrower shall not directly or
indirectly, make any Investments except:
(i) Investments in obligations issued by, or guaranteed by, the
United States of America or any agency or instrumentality thereof,
provided that such obligations mature within 180 days of the date of
acquisition thereof;
(ii) Investments in certificates of deposit, repurchase
agreements, money market or other cash management accounts, bankers
acceptances and short term Eurodollar time deposits with financial
institutions having a long term deposit rating of at least A from
Moody's Investors Service, Inc. or Standard & Poor's Corporation,
respectively;
(iii) Investments in commercial paper rated P1 or A1 by Moody's
Investor's Service, Inc. or Standard & Poor's Corporation, respectively;
or
(iv) temporary expense advances to Borrower's employees not to
exceed $5,000 in the aggregate outstanding at any one time.
SECTION 6.07. Permitted Activities. The Borrower shall not engage
in any business or activity other than the operation of the Business in the
Franchise Area.
SECTION 6.08. Disposition of Licenses, etc. The Borrower shall
not sell, assign, transfer or otherwise dispose or attempt to dispose of in any
way any governmental authorizations, licenses, permits or approvals (including,
without limitation, any Licenses or Certificate) necessary or appropriate for
the operation of the Business in the Franchise Area.
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SECTION 6.09. Transactions with Affiliates. The Borrower shall
not directly or indirectly, enter into any transaction, including, without
limitation, leases or other agreements for the purchase or use of any goods or
services, with any Affiliate, except in the ordinary course of and pursuant to
reasonable requirements of Borrower's business and upon fair and reasonable
terms no less favorable to Borrower than Borrower would obtain in a comparable
arm's length transaction with an unaffiliated person.
SECTION 6.10. ERISA. The Borrower shall not:
(A) engage, or permit any ERISA Affiliate to engage in any
prohibited transaction described in Section 406 of ERISA or 4975 of the IRC for
which a statutory or class exemption is not available or a private exemption
has not been previously obtained from the United States Department of Labor;
(B) permit to exist any accumulated funding deficiency (as
defined in Section 302 of ERISA and Section 412 of the IRC), whether or not
waived;
(C) fail, or permit any ERISA Affiliate to fail, to pay timely
required contributions or annual installments due with respect to any waived
funding deficiency to any Benefit Plan;
(D) terminate, or permit any ERISA Affiliate to terminate, any
Benefit Plan which would result in any material liability of the Borrower under
Title IV of ERISA;
(E) fail to make any contribution or payment to any Multiemployer
Plan which the Borrower or any ERISA Affiliate may be required to make under
any agreement relating to such Multiemployer Plan, or any law pertaining
thereto;
(F) amend, or permit any ERISA Affiliate to amend, a Plan
resulting in an increase in current liability for the plan year such that the
Borrower is required to provide security to such Plan under Section 401(a) (29)
of the IRC; or
(G) fail, or permit any ERISA Affiliate to fail, to pay any
required installment under Section 412 of the IRC on or before the due date for
such installment or other payment.
SECTION 6.11. Indebtedness. The Borrower shall not create or
suffer to exist, or permit any of its subsidiaries to create or suffer to
exist, any Debt except:
(i) the Obligations;
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(ii) Guarantees and third party financing permitted by Section
6.05;
(iii) purchase money Debt secured by Liens permitted by clause
(v) of Section 6.01;
(iv) obligations under capital or operating leases not to exceed
$82,000 in the aggregate in any consecutive twelve month calendar
period;
(v) obligations to shareholders and Affiliates not to exceed
$70,000 in the aggregate, plus accrued interest thereon, which must at
all times be subordinated to the Obligations on terms satisfactory to
the Lender; and
(vi) trade payables incurred in the ordinary course of business.
SECTION 6.12. Margin Regulation. The Borrower shall not use or
permit any other Person to use any portion of the proceeds of any credit
extended under this Agreement in any manner which might cause the extension of
credit made by Lender or the application of such proceeds to violate the
Securities Act of 1933 or Securities Exchange Act of 1934 (each as amended from
time to time, and any successor statute) or to violate Regulation G, Regulation
U, or Regulation X, or any other regulation of the Federal Reserve Board, in
each case as in effect on the date or dates of such extension of credit and
such use of proceeds.
SECTION 6.13. Capital Expenditures. The Borrower shall not make
capital expenditures in excess of those set forth in the Business Plan.
SECTION 6.14. Management Fees. The Borrower shall not pay
management fees in excess of those set forth in the Management Agreement as in
effect on the date hereof. After the occurrence and during the continuance of
any Event of Default, the Borrower shall not pay any portion of the management
fees due under the Management Agreement or any other similar fees due to any
Affiliates that do not cover the direct costs of services performed pursuant to
the Management Agreement or for the benefit of the Borrower by the employees of
MCC, Mercury, Inc. or any Affiliate, billed at a rate no greater than would be
charged by an unaffiliated person in a comparable arm's length transaction.
SECTION 6.15. Confidentiality. The Borrower shall not at any time
before or after payment in full and satisfaction of all of the Obligations,
reveal, divulge or make known, or knowingly permit to be so revealed, divulged
or made known, to any Person (including persons within its own organization who
do not have a definite need to know for the purpose of performance of this
Agreement), the terms or conditions of this Agreement or
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any document or agreement now or hereafter executed in connection herewith,
provided that the foregoing shall not apply to information required to be
disclosed by order of a court of competent jurisdiction or in connection with
any governmental investigation, including, but not limited to, the FCC or the
PUC (in each case to the extent disclosure is required, but no further), so
long as the Borrower notifies the Lender in writing of any circumstances of
which Borrower is aware that may lead to such a requirement or order, so as to
allow Lender to take steps to contest such order or investigation. Lender
agrees to keep confidential for a period of two years the Borrower's financial
statements, profit and loss statements, progress reports and any other items
marked in writing as confidential; provided, however, that such confidentiality
obligation shall not apply to (i) any information disclosed to Persons employed
by or expected to become engaged in evaluating, approving, structuring,
auditing or administering the Loans or Obligations hereunder, including,
without limitation, the Lender's representatives, attorneys, advisors,
accountants, and rating agencies, (ii) any information which is or becomes
available to the Lender from a source other than the Borrower or Mercury, (iii)
any information is or becomes available to the public other than as a result of
disclosure by Lender or its above-described representatives or agents, (iv) any
information required or requested by any governmental agency or representative
thereof or pursuant to legal process or (v) any information in connection with
the exercise of any remedy under the Loan Documents; and provided, further,
that nothing herein shall prevent Lender from disclosing such information to
any bona fide assignee, transferee or participant or prospective assignee,
transferee or participant or any of their respective representatives that have
agreed to comply with this Section 6.15 in connection with the contemplated
assignment or transfer of any Loans or hereunder or participation therein.
ARTICLE VII
COLLATERAL SECURITY
SECTION 7.01. Collateral Security. To secure payment and
performance of the Obligations, Borrower hereby grants to Lender a right of
setoff against and a continuing security interest in and to the following
property and interests in property, whether now owned or hereafter acquired by
Borrower and wheresoever located: (i) Accounts, contract rights, general
intangibles, tax refund claims, tax refunds, things in action, causes of
action, inventions, designs, patents, patent applications, trademarks, trade
names, trademark applications, service marks, service mark applications, trade
styles, brand names, copyrights, goodwill, registrations, leases, licenses,
franchises, customer lists, reversion from any employee benefit plans, claims
against carriers and shippers, guarantee claims, security interests, security
deposits or other security held by
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or granted to Borrower, chattel paper, instruments, notes, letters of credit,
documents, documents of title, and to the extent permitted by law, the
Construction Permits, the Operating Licenses, the Certificate and other
governmental authorizations; (ii) inventory; (iii) machinery, equipment and
fixtures; (iv) all of Borrower's now owned or hereafter acquired monies, and
any and all other property and interests in property of Borrower now or
hereafter coming into the actual possession, custody or control of Lender in
any way or for any purpose (whether for safekeeping, deposit, custody, pledge,
transmission, collection or otherwise); (v) all insurance proceeds of or
relating to any of the foregoing; (vi) all of Borrower's books and records
relating to any of the foregoing; and (vii) all accessions and additions to,
substitutions for, and replacements, products and proceeds of any of the
foregoing.
SECTION 7.02. Preservation of Collateral and Perfection of
Security Interests Therein. The Borrower shall execute and deliver to Lender,
concurrently with the execution of this Agreement, and at any time or times
hereafter at the request of Lender, all financing statements or other documents
(and pay the cost of filing or recording the same in all public offices deemed
necessary by Lender), as Lender may request, in a form satisfactory to Lender,
to perfect and keep perfected the security interest in the Collateral granted
by the Borrower to Lender or to otherwise protect and preserve the Collateral
and Lender's security interest therein or to enforce Lender's security
interests in the Collateral. Should the Borrower fail to do so, Lender is
authorized to sign any such financing statements as the Borrower's agent. The
Borrower further agrees that a carbon, photographic or other reproduction of
this Agreement or of a financing statement is sufficient as a financing
statement.
SECTION 7.03. Appointment of Lender as the Borrower's
Attorney-in-Fact. The Borrower hereby irrevocably designates, makes,
constitutes and appoints Lender (and all persons designated by Lender) as the
Borrower's true and lawful attorney-in-fact, and authorizes Lender, in the
Borrower's or Lender's name, to, following the occurrence of an Event of
Default: (i) demand payment of Accounts; (ii) enforce payment of Accounts by
legal proceedings or otherwise; (iii) exercise all of the Borrower's rights and
remedies with respect to proceedings brought to collect an Account; (iv) sell
or assign any Account upon such terms, for such amount and at such time or
times as Lender deems advisable; (v) settle, adjust, compromise, extend or
renew an Account; (vi) discharge and release any Account; (vii) prepare, file
and sign the Borrower's name on any proof of claim in bankruptcy or other
similar document against an account debtor of the Borrower; (viii) notify the
post office authorities to change the address for delivery of the Borrower's
mail to an address designated by Lender, and open and deal with all mail
addressed
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to the Borrower; (ix) do all acts and things which are necessary in Lender's
sole discretion, to fulfill the Borrower's obligations under this Agreement;
(x) take control in any manner of any item of payment or proceeds thereof; (xi)
have access to any lockbox or postal box into which the Borrower's mail is
deposited; (xii) endorse the Borrower's name upon any items of payment or
proceeds thereof and deposit the same in Lender's account on account of the
Borrower's Obligations; (xiii) endorse the Borrower's name upon any chattel
paper, document, instrument, invoice, or similar document or agreement relating
to any Account or any goods pertaining thereto; and (xiv) sign the Borrower's
name on any verification of Accounts and notices thereof to account debtors.
SECTION 7.04. Collection of Accounts and Restricted Account
Arrangements. The Borrower hereby represents and warrants that each depository
account ("Collection Account") now maintained by the Borrower at any bank
("Collection Agent") for the collection of checks and cash constituting
proceeds of Accounts and sales of other personal property which are part of the
Collateral is identified on Schedule 7.04 attached hereto and made a part
hereof. With respect to each Collection Account, the Borrower shall, no later
than the Effective Date, deliver to Lender, a "Restricted Account Agreement"
substantially in the form of Exhibit K attached hereto and made a part hereof,
duly executed and delivered by the Borrower and the applicable Collection
Agent, authorizing and directing such Collection Agent, upon receipt of written
notice from Lender that an Event of Default has occurred and is continuing, to
deposit all checks and cash received into a restricted account (a "Restricted
Account") and remit all amounts deposited in such Restricted Account to
Lender's account specified in such Restricted Account Agreement until such time
as the Collection Agent receives written notice from Lender rescinding such
authorization. The Borrower shall, following the occurrence and during the
continuance of an Event of Default and any subsequent request by Lender
therefor, take such further action as Lender may reasonably deem desirable to
effect the transfer of exclusive ownership and control of the Restricted
Accounts and all Collection Accounts to Lender. Until all of the Obligations
have been indefeasibly paid in full and the Commitment has been terminated, the
Borrower agrees not to enter into any agreement or execute and deliver any
direction which would modify, impair or adversely affect the rights and
benefits of Lender under any Restricted Account Agreement. The Borrower shall
not open, establish or maintain any Collection Account (other than those
identified on Schedule 7.04 hereto) without first having delivered to Lender a
duly executed and delivered Restricted Account Agreement with respect to such
Collection Account. The Borrower shall notify Lender in writing not less than
five (5) days prior to the date it shall open or establish any Collection
Account other than an account described on Schedule 7.04 hereto.
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ARTICLE VIII
EVENTS OF DEFAULT; REMEDIES
SECTION 8.01. Events of Default. The following events shall each
constitute an "Event of Default":
(a) The Borrower shall fail to pay the principal of or interest
on any Note or any other amounts payable hereunder or under any of the other
Loan Documents when due, whether as scheduled, at a date fixed for prepayment,
by acceleration or otherwise, and such failure with respect to the payment of
principal or interest shall continue for five days and with respect to any
other amounts payable hereunder, shall continue for ten days; or
(b) the Borrower shall fail to observe or perform any other
covenant, condition or agreement to be observed or performed by the Borrower in
any of the Loan Documents or in any material agreement of the Borrower and the
Borrower fails to cure such breach within 10 Business Days after written notice
thereof from Lender unless the breach relates to a covenant contained in
Section 5.04, in which case no grace period shall apply; or
(c) any representation or warranty made by the Borrower in
connection with this Agreement or any other Loan Document, or the Loans or any
statement or representation made in any report, certificate, financial
statement or other instrument (other than the projections provided pursuant to
Section 4.01 as to which this paragraph (c) shall be inapplicable) furnished by
or on behalf of the Borrower pursuant to this Agreement or any other Loan
Document, shall prove to have been false or misleading in any material respect
when made or delivered or when deemed made in accordance with the terms hereof
or thereof; or
(d) the Borrower shall fail to make any payment due (whether by
scheduled maturity, required prepayment, acceleration, demand or otherwise) on
any other obligation for borrowed money and such failure shall continue after
the applicable grace period, if any, specified in the agreement or instrument
relating to such indebtedness; or any other default or event under any
agreement or instrument relating to any indebtedness or any other event, shall
occur and shall continue after the applicable grace period, if any, specified
in such agreement or instrument if the effect of such default or event is to
accelerate, or to permit the acceleration of, the maturity of such
indebtedness; or any such indebtedness shall be declared to be due and payable
or required to be prepaid (other than by a regularly scheduled required
prepayment) prior to the stated maturity thereof; or
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(e) Borrower shall (i) apply for or consent to the appointment of
a receiver, trustee, custodian, sequestrator or similar official for Borrower
or for a substantial part of its property, (ii) make a general assignment for
the benefit of creditors, (iii) become unable, admit in writing its inability
or fail generally to pay its debts as they become due, (iv) voluntarily or
involuntarily dissolve, liquidate or wind up its affairs, or (v) take action
for the purpose of effecting any of the foregoing; or
(f) a proceeding under any bankruptcy, reorganization,
arrangement of debts, insolvency or receivership law is filed by or against the
Borrower or the Borrower takes any action to authorize any of the foregoing
matters, and in the case of any such proceeding instituted against the Borrower
(but not instituted by the Borrower), either such proceeding shall remain
undismissed or unstayed for a period of 60 days or any of the actions sought in
such proceeding (including, without limitation, the entry of an order for
relief against, or the appointment of a receiver, trustee or other similar
official for the Borrower or any substantial part of its property) shall be
granted or shall occur; or
(g) the Borrower becomes insolvent or fails generally to pay its
debts as they become due; or
(h) a Termination Event occurs which Lender in good faith
believes would subject the Borrower to a material liability; or
(i) the plan administrator of any Plan applies under Section
412(d) of the IRC for a waiver of the minimum funding standards of Section
412(a) of the IRC and Lender in good faith believes that the approval of such
waiver could subject either the Borrower or any ERISA Affiliate to material
liability; or
(j) any of the Licenses, the Certificate or any other license,
authorization or other governmental consent or approval necessary for the
continuing operation of the Borrower or the System or any other material
authorization or approval of or material filing with the FCC, the PUC or any
other governmental authority with respect to the conduct by the Borrower of its
business and operations, shall not be obtained as and when required to permit
the Borrower to conduct the Business substantially as then being conducted and
to perform its material obligations under the Loan Documents, or shall cease to
be in full force and effect, which in respect of any of the Licenses or the
Certificate shall occur when an order revoking or terminating any said License
or the Certificate shall be issued, or the FCC, the PUC or any other
governmental authority having jurisdiction over any such License or Certificate
shall, prior to
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the termination thereof decide, not to renew such License or Certificate; or
(k) the FCC or the PUC, by final order, determines that the
existence or performance of this Agreement or any other Loan Document will
result in a revocation, suspension or material adverse modification of any of
the Licenses or Certificate; or
(l) for any reason any Loan Document shall not be in full force
and effect or shall not be enforceable in accordance with its terms, or any
security interest or lien granted pursuant thereto shall fail to be perfected,
or any party thereto other than Lender shall contest the validity of any lien
granted under, or shall disaffirm its obligations under any Loan Document; or
(m) the Borrower shall have failed to accept the Equipment in
accordance with the Purchase Agreement within the period specified in the
Purchase Agreement or shall otherwise default under the Purchase Agreement,
which default shall not have been cured or waived; or
(n) final judgment or judgments for the payment of money in
excess of $50,000 individually or $100,000 in the aggregate at any one time
shall have been rendered against the Borrower, and the same shall not have been
discharged within forty-five (45) days after the entry thereof, or no insurer
shall have admitted its liability in writing with respect to the full amount of
such final judgment or judgments; or
(o) for any reason, the Borrower ceases to operate the Business
or own the Franchise or any of the Licenses or the Certificate; or
(p) the Borrower is enjoined, restrained or in any way prevented
by the order of any court or administrative or regulatory agency from
conducting the Business or any other material part of Borrower's business
affairs; or
(q) the Borrower becomes subject to any liabilities, costs,
expenses, damages, fines or penalties which could reasonably be expected to
have a Material Adverse Effect on its business, operations, assets or condition
(financial or otherwise) arising out of or related to (i) any Remedial Action
in response to a Release or threatened Release at any location of any
contaminant into the indoor or outdoor environment or (ii) any material
violation of any environmental, health or safety requirement of law; or
(r) the sum of the Borrower's Cash Flow plus Cash Equity
Contributions for any consecutive four fiscal quarter period of the Borrower
falls below the Estimated Cash Flow
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projected for the Borrower for such four fiscal quarter period of the Borrower
by an amount equal to or in excess of the Applicable Cash Flow Margin, unless
within thirty days thereafter Permitted Capital Contributions are made;
(s) the Borrower's Fixed Charge Coverage Ratio in any consecutive
four fiscal quarter period ending on June 30, 1997 or thereafter shall be less
than 1.10 to 1.00 unless within thirty days thereafter Permitted Capital
Contributions are made; or
(t) the Management Contract shall be terminated or Mercury shall
cease to have substantial management responsibilities with respect to the
Business or the System unless another Affiliate with substantial experience in
the management of cellular telephone systems is appointed manager of the
System; or
(u) a Material Adverse Effect (other than any directly resulting
from general macro-economic conditions) shall occur.
SECTION 8.02 Termination of Commitment; Acceleration. Upon the
occurrence and at any time during the continuance of any Event of Default,
Lender may:
(a) by notice to the Borrower, terminate Lender's Commitment to
Borrower to make Loans hereunder; or
(b) declare the Obligations to be immediately due and payable,
whereupon the Obligations shall be immediately due and payable without notice
of any kind, provided, however, that if an Event of Default described in
Section 8.01(f) shall exist or occur, all of the Obligations shall
automatically, without declaration or notice of any kind, be immediately due
and payable;
SECTION 8.03. Waiver of Demand. Demand, presentment, protest and
notice of nonpayment are hereby waived by the Borrower. The Borrower also
waives the benefit of all valuation, appraisal and exemption laws.
SECTION 8.04. Rights and Remedies Generally. If an Event of
Default occurs, Lender shall have, in addition to any other rights and remedies
contained in this Agreement or in any of the other Loan Documents, all of the
rights and remedies of a secured party under the Code or other applicable laws,
all of which rights and remedies shall be cumulative, and none exclusive, to
the extent permitted by law. In addition to all such rights and remedies, the
sale, lease or other disposition of the Collateral, or any part thereof, by
Lender after the occurrence of an Event of Default may be for cash, credit or
any combination thereof, and Lender may purchase all or any part of the
Collateral at public or, if permitted by law, private sale,
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and in lieu of actual payment of such purchase price, may set off the amount of
such purchase price against the obligations then owing. Any sales of the
Collateral may be adjourned from time to time with or without notice. Lender
may, in its sole discretion, cause the Collateral to remain on Borrower's
premises, at the Borrower's expense, pending sale or other disposition of the
Collateral. Lender shall have the right to conduct such sales on the Borrower's
premises, at the Borrower's expense, or elsewhere, on such occasion or
occasions as Lender may see fit.
SECTION 8.05. Entry Upon Premises and Access to Information. If
an Event of Default occurs, Lender shall have the right to enter upon the
premises of the Borrower where the Collateral is located (or is believed to be
located) without any obligation to pay rent to Borrower, or any other place or
places where the Collateral is believed to be located and kept, and render the
Collateral unusable or remove the Collateral therefrom to the premises of
Lender or any agent of Lender, for such time as Lender may desire, in order
effectively to collect or liquidate the Collateral, and/or Lender may require
the Borrower to assemble the Collateral and make it available to Lender at a
place or places to be designated by Lender. If an Event of Default occurs,
Lender shall have the right to obtain access to the Borrower's data processing
equipment, computer hardware and software relating to the Collateral and to use
all of the foregoing and the information contained therein in any manner Lender
deems appropriate.
SECTION 8.06. Sale or Other Disposition of Collateral by Lender.
Any notice required to be given by Lender of a sale, lease or other disposition
or other intended action by Lender with respect to any of the Collateral which
is deposited in the United States mails, postage prepaid and duly addressed to
the Borrower at the address specified in Section 9.01 below, at least ten (10)
Business Days prior to such proposed action shall constitute fair and
reasonable notice to the Borrower of any such action. The net proceeds realized
by Lender upon any such sale or other disposition, after deduction for the
expense of retaking, holding, preparing for sale, selling or the like and the
reasonable attorneys' fees and legal expenses incurred by Lender in connection
therewith, shall be applied as provided herein toward satisfaction of the
Obligations. Lender shall account to the Borrower for any surplus realized upon
such sale or other disposition, and the Borrower shall remain liable for any
deficiency. The commencement of any action, legal or equitable, or the
rendering of any judgment or decree for any deficiency shall not affect
Lender's security interest in the Collateral. The Borrower agrees that Lender
has no obligation to preserve rights to the Collateral against any other
parties. Lender is hereby granted a license or other right to use, without
charge, the Borrower's labels, patents, copyrights, rights of use of any name,
trade secrets, trade names, trademarks, service
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marks and advertising matter, or any property of a similar nature, as it
pertains to the Collateral, and the Borrower's rights under all licenses and
all franchise agreements shall inure to Lender's benefit until the obligations
are paid in full.
SECTION 8.07. Governmental Approvals. In connection with the
enforcement by Lender of any remedies available to it as a result of any Event
of Default, the Borrower shall join and cooperate fully with, at the request of
Lender, any receiver referred to below and/or the successful bidder or bidders
at any foreclosure sale in a filing of an application (and furnishing any
additional information that may be required in connection with such application
or which Lender may believe relevant to such application) with the FCC, the PUC
and all applicable federal, state and local governmental authorities,
requesting their prior approval of (i) the operation or abandonment of all or
any portion of the System and/or (ii) the transfer of control of the Borrower
or assignment of all licenses, certificates, authorizations, approvals and
permits, issued to the Borrower by the FCC, the PUC or any such authorities
with respect to the System and the operation thereof, to Lender, the receiver
or to the successful bidder or bidders. In connection with the foregoing, the
Borrower shall take such further actions, and execute all such instruments, as
Lender reasonably deems necessary or desirable. The Borrower agrees that Lender
may enforce any obligation of the Borrower as set forth in this paragraph by an
action for specific performance. In addition, Borrower hereby irrevocably
constitutes and appoints Lender and any agent or officer thereof (which
appointment is coupled with an interest) as its true and lawful
attorney-in-fact with full irrevocable power and authority and in the place and
stead of the Borrower and in the name of the Borrower or in its own name, from
time to time in its discretion after the occurrence and during the continuance
of an Event of Default and in connection with the foregoing, for the purpose of
executing on behalf and in the name of the Borrower any and all of the
above-referenced instruments and to take any and all appropriate action in
furtherance of the foregoing. The exercise of any rights or remedies hereunder
or under any other Loan Document by Lender that may require FCC or PUC approval
shall be subject to obtaining such approval. Pending the receipt of any PUC or
FCC approval the Borrower shall not do anything to delay, hinder, interfere or
obstruct the exercise of Lender's rights or remedies hereunder in obtaining
such approvals. In accordance with the requirements of 47 C.F.R. 22.917 (1985),
or any successor provision thereto, Lender shall notify the Borrower and the
FCC in writing at least ten (10) days prior to the repossession, in accordance
with the Loan Documents, of all or any part of the System which is subject to
said regulation.
SECTION 8.08. Appointment of Receiver or Trustee. In connection
with the exercise of its remedies under this
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Agreement, Lender may, upon the occurrence of an Event of Default, obtain the
appointment of a receiver or trustee to assume, upon receipt of all necessary
judicial, FCC, the PUC or other governmental authority, consents or approvals,
control of or ownership of the Construction Permits or the Operating Licenses
or the Certificate. Such receiver or trustee shall have all rights and powers
provided to it by law or by court order or provided to Lender under this
Agreement. Upon the appointment of such trustee or receiver, the Borrower
agrees to cooperate, to the extent necessary or appropriate, in the expeditious
preparation, execution and filing of an application to the FCC and to the PUC
for consent to the transfer of control or assignment of the Construction
Permits or the Operating Licenses or the Certificate of the Borrower to the
receiver or trustee.
SECTION 8.09. Lender Not Liable. Lender shall not be responsible
or liable for any shortage, discrepancy, damage, loss or destruction of any
part of the Collateral or of any instrument received in payment therefor or for
any damages resulting therefrom (unless such loss shall be finally adjudicated
or otherwise conclusively determined to have been caused solely by gross
negligence or willful misconduct of Lender). Lender shall not, under any
circumstances or in any event whatsoever, have any liability for any error or
omission of any kind made in the settlement, collection or payment of any of
the Collateral. The costs of collection and enforcement, including but not
limited to counsel fees and out-of-pocket expenses, shall be borne solely by
the Borrower whether the same are incurred by Lender or the Borrower.
SECTION 8.10. Right of Set-off. In addition to any rights and
remedies of Lender provided by law, Lender shall have the right, without prior
notice to the Borrower, upon the occurrence of an Event of Default, to set-off
and apply against the amount of any Obligation, whether matured or unmatured,
any amount owing from Lender or any Affiliate of Lender to the Borrower, or any
Affiliate of the Borrower. Lender agrees promptly to notify the Borrower after
any such set-off and application made by Lender or any Affiliate of Lender;
provided that the failure to give such notice shall not affect the validity of
such set-off and application. The Borrower hereby agrees that the foregoing
provisions are intended to be construed so as to satisfy the requirements of
Section 553 of the Federal Bankruptcy Code or amendments thereto (including any
requirement of mutuality of obligations therein).
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices. Notices and other communications provided
for herein shall be in writing and shall be de-
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livered by a courier service of recognized standing or mailed (or, if by telex,
graphic scanning or other telegraphic or telecopy communications equipment of
the sending party, delivered by such equipment) addressed, if to Borrower, at
14th Floor, Calcasieu Marine National Bank, One Lakeshore Drive, Lake Charles,
Louisiana 70604, Attention: William L. Henning, Jr. (telecopy no.
(318)433-0587, confirmation no. (318)436-9000), and if to Lender, c/o AT&T
Capital Corporation, Capital Markets Division at 44 Whippany Road, Morristown,
NJ 07962-1983, Attention: Operations Manager (telecopy no. (201) 397-4368,
confirmation no. (201) 397-3429), with a copy to AT&T Capital Corporation/
Capital Markets Division at 44 Whippany Road, Morristown, NJ 07962-1983,
Attention: Chief Counsel (telecopy no. (201) 397-3165, confirmation no. (201)
397-4190). All notices and other communications given to any party hereto in
accordance with the provisions of this Agreement shall be deemed to have been
given (a) three days after mailing when sent by registered or certified mail,
postage prepaid, return receipt requested, or (b) upon receipt, if by courier
service or any telegraphic communications equipment of the sender, in each case
addressed to such party as provided in this Section or in accordance with the
latest unrevoked direction from such party.
SECTION 9.02. No Waivers; Amendments. (a) No failure or delay of
Lender to exercise any right hereunder or under any other Loan Document shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right, preclude any other or further exercise thereof or the exercise of
any other right. No waiver of any provision of this Agreement or any other Loan
Document nor consent to any departure by the Borrower therefrom shall in any
event be effective unless the same shall be in writing and signed by Lender and
the Borrower, and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given. No notice or demand on
the Borrower in any case shall entitle the Borrower to any other or further
notice or demand in similar or other circumstances.
(b) Neither this Agreement nor any other Loan Documents may be
amended or modified except pursuant to an agreement or agreements in writing
executed by the Borrower and Lender.
SECTION 9.03. Governing Law and Jurisdiction. THIS AGREEMENT AND
THE OTHER LOAN DOCUMENTS SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE INTERNAL LAWS OF THE STATE OF NEW JERSEY WITHOUT GIVING EFFECT TO ANY
CONFLICTS OF LAWS PRINCIPLES. THE BORROWER AND LENDER CONSENT TO THE
JURISDICTION OF ANY LOCAL, STATE OR FEDERAL COURT LOCATED IN THE STATE OF NEW
JERSEY AND WAIVE ANY OBJECTION RELATING TO IMPROPER VENUE OR FORUM NON
CONVENIENS TO THE CONDUCT OF ANY PROCEEDING BY SUCH COURT.
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SECTION 9.04. Expenses; Documentary Taxes. The Borrower will pay
all reasonable out-of-pocket expenses incurred by Lender in connection with the
negotiation, preparation and execution of the Loan Documents (whether or not
the transactions contemplated hereby shall be consummated), the administration
of the Loan Documents, the creation, perfection, priority or protection of the
Liens in the Collateral, and the enforcement of the rights of Lender in
connection with this Agreement, any other Loan Documents or the Collateral,
including all reasonable attorneys' fees and related expenses and costs. The
Borrower agrees that it shall indemnify Lender from and hold it harmless
against any documentary taxes, assessments or charges made by any governmental
authority by reason of the execution and delivery of this Agreement or any
other Loan Document.
SECTION 9.05. Equitable Relief. The Borrower recognizes that, in
the event the Borrower fails to perform, observe or discharge any of its
obligations or liabilities under this Agreement, or any other Loan Document,
any remedy at law may prove to be inadequate relief to Lender; therefore,
Borrower agrees to the extent permitted by applicable law, that Lender, if
Lender so requests, shall be entitled to temporary and permanent injunctive
relief in any such case without the necessity of proving irreparable harm.
SECTION 9.06. Indemnification; Limitation of Liability. (a) The
Borrower agrees to protect, indemnify and hold harmless Lender and each of its
officers, directors, employees, attorneys, consultants and agents (collectively
called the "Indemnitees") from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, claims,
costs, expenses and disbursements of any kind or nature whatsoever (including,
without limitation, the reasonable fees and disbursements of counsel for and
consultants of such Indemnitees in connection with any investigative,
administrative or judicial proceeding, whether or not such Indemnitees shall be
designated a party thereto), which may be imposed on, incurred by, or asserted
against such Indemnitees (whether direct, indirect, or consequential and
whether based on any federal or state laws or other statutory regulations,
including, without limitation, securities, environmental and commercial laws
and regulations, under common law or at equitable cause or on contract or
otherwise) in any manner relating to or arising out of this Agreement or any of
the other Loan Documents, or any act, event or transaction related or attendant
thereto, the agreements of Lender contained herein, the making of Loans, the
management of such Loans or the Collateral (including any liability under
federal, state or local environmental laws or regulations) or the use or
intended use of the proceeds of such Loans hereunder (collectively, the
"Indemnified Matters"); provided that the Borrower shall have no obligation to
any Indemnitee hereunder with respect to Indemnified Matters caused by or
resulting from
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the willful misconduct or gross negligence of such Indemnitee. To the extent
that the undertaking to indemnify, pay and hold harmless set forth in the
preceding sentence may be unenforceable because it is violative of any law or
public policy, the Borrower shall contribute the maximum portion which it is
permitted to pay and satisfy under applicable law, to the payment and
satisfaction of all Indemnified Matters incurred by the Indemnitees.
(b) To the extent permitted by applicable law, no claim may be
made by the Borrower or any other Person against Lender or any of its
affiliates, directors, officers, employees, agents, attorneys or consultants
for any special, indirect, consequential or punitive damages in respect of any
claim for breach of contract or any other theory of liability arising out of or
related to the transactions contemplated by any of the Loan Documents or any
act, omission or event occurring in connection therewith; and the Borrower
hereby waives, releases and agrees not to sue upon any claim for any such
damages, whether or not accrued and whether or not known or suspected to exist
in its favor. Neither Lender nor any of its affiliates, directors, officers,
employees, agents, attorneys or consultants shall be liable for any action
taken or omitted to be taken by it or them under or in connection with any of
the Loan Documents, except for its or their own gross negligence or willful
misconduct.
SECTION 9.07. Survival of Agreements, Representations and
Warranties, etc. All warranties, representations and covenants made by the
Borrower in any Loan Document survive the execution and delivery of this
Agreement and the other Loan Documents and the making and repayment of the
Obligations.
SECTION 9.08. Successors and Assigns. Borrower may not assign or
transfer any of its rights or obligations hereunder without the prior written
consent of Lender. This Agreement shall be binding upon and inure to the benefit
of Borrower and Lender and their respective successors and assigns.
SECTION 9.09. Severability. In case any one or more of the
provisions contained in this Agreement or any other Loan Document shall be
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein and therein shall
not in any way be affected or impaired thereby.
SECTION 9.10. Cover Page, Table of Contents and Section Headings.
The cover page, Table of Contents and section headings used herein are for
convenience of reference only, are not part of this Agreement and are not to
affect the construction of or be taken into consideration in interpreting this
Agreement.
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SECTION 9.11. Counterparts. This Agreement may be signed in
counterparts with the same effect as if the signatures thereof and hereto were
upon the same instrument.
SECTION 9.12. Application of Payments. Notwithstanding any
contrary provision contained in this Agreement or in any of the other Loan
Documents, upon the occurrence and during the continue of any Event of Default,
the Borrower irrevocably waives the right to direct the application of any and
all payments at any time or times hereafter received by Lender from the
Borrower or with respect to any of the Collateral, and Borrower does hereby
irrevocably agree that Lender shall have the continuing exclusive right to
apply and reapply any and all payments received at any time or times hereafter,
whether with respect to the Collateral or otherwise, against the Obligations in
such manner as Lender may deem advisable, notwithstanding any entry by Lender
upon any of its books and records.
SECTION 9.13. Marshalling; Payments Set Aside. Lender shall be
under no obligation to marshall any assets in favor of the Borrower or any
other party or against or in payment of any or all of the Obligations. To the
extent that the Borrower makes a payment or payments to Lender or Lender
enforces its security interests or exercises its rights of setoff, and such
payment or payments or the proceeds of such enforcement or setoff or any part
thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside and/or required to be repaid to a trustee, receiver or
any other party under any bankruptcy law, state or federal law, common law or
equitable cause, then to the extent of such recovery, the obligation or part
thereof originally intended to be satisfied shall be revived and continued in
full force and effect as if such payment had not been made or such enforcement
or setoff had not occurred.
SECTION 9.14. SERVICE OF PROCESS. THE BORROWER WAIVES PERSONAL
SERVICE OF ANY PROCESS UPON IT AND, CONSENTS THAT ALL SERVICE OF PROCESS SHALL
BE MADE BY REGISTERED MAIL, RETURN RECEIPT REQUESTED, DIRECTED TO THE BORROWER
AT THE ADDRESS INDICATED IN SECTION 9.01 AND SERVICE SO MADE SHALL BE DEEMED TO
BE COMPLETED FIVE (5) DAYS AFTER SAME SHALL HAVE BEEN POSTED AS AFORESAID.
SECTION 9.15. WAIVER OF JURY TRIAL. THE BORROWER AND LENDER EACH
WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER
SOUNDING IN CONTRACT, TORT, OR OTHERWISE, BETWEEN LENDER AND THE BORROWER
ARISING OUT OF, CONNECTED WITH, RELATED TO OR INCIDENTAL TO THE RELATIONSHIP
ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED
IN CONNECTION THEREWITH OR THE TRANSACTIONS RELATED THERETO. EACH OF THE
BORROWER AND LENDER HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND,
ACTION OR
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CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT EITHER
MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS AGREEMENT WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR
RIGHT TO TRIAL BY JURY.
SECTION 9.16. Consolidation of Operations. The Borrower has
advised Lender that the Borrower and certain of its Affiliates which operate
other cellular telephone franchises may wish to consolidate their operations
under one entity. Should Lender in its sole discretion agree to finance the
consolidated operations of such entity, Lender will cooperate with the Borrower
in amending this Agreement in a manner which would permit such consolidation to
occur notwithstanding the negative covenants contained herein.
SECTION 9.17. Entire Agreement, etc. This Agreement (including
all schedules and exhibits referred to herein), the Notes and all other Loan
Documents constitute the entire contract between the parties hereto with
respect to the subject matter hereof and thereof and shall supersede and take
the place of any other instrument purporting to be an agreement of the parties
hereto relating to such subject matter.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed by their duly authorized officers as of the day and year
first above written.
MISSISSIPPI-34 CELLULAR
CORPORATION
By: /s/ [ILLEGIBLE]
-----------------------------------
Name:
Title: President
AT&T CREDIT CORPORATION
By: /s/ EDWARD W. ANDREWS, JR.
-----------------------------------
Name: Edward W. Andrews, Jr.
Title: Senior Vice President
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EXHIBIT A
BUSINESS PLAN
[To be Attached]
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<PAGE> 60
EXHIBIT B
FORM OF
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT ("Pledge Agreement"), dated as of December
20, 1993, is executed by and among the owners of the capital stock of
MISSISSIPPI-34 CELLULAR CORPORATION, a Mississippi corporation ("Borrower")
listed on the signature pages hereto ("Pledgors"), and AT&T Credit Corporation
(the "Lender"). Capitalized terms used herein and not otherwise defined herein
shall have the respective meanings ascribed to such terms in the Loan
Agreement.
WITNESSETH:
WHEREAS, the Borrower and Lender have entered into a certain Loan
and Security Agreement of even date herewith (as amended, restated,
supplemented or otherwise modified from time to time, the "Loan Agreement"),
pursuant to which Lender has agreed, subject to certain conditions precedent,
to make loans to Borrower from time to time;
WHEREAS, each of the Pledgors owns that percentage of the issued
and outstanding capital stock of the Borrower set forth on Exhibit A hereto and
will derive direct and indirect economic benefit from the loans made to the
Borrower under the Loan Agreement;
WHEREAS, the Lender has required, as a condition to its entering
into the Loan Agreement, that the Pledgors execute and deliver this Pledge
Agreement; and
WHEREAS, the Pledgors desire to secure their "Liabilities" (as
hereinafter defined) to the Lender by the grant to the Lender of a first
priority security interest in the "Pledged Collateral" (as hereinafter
defined);
NOW, THEREFORE, for and in consideration of the foregoing and of
any financial accommodations or extensions of credit (including, without
limitation, any loan or advance by renewal, refinancing or extension of the
agreements described hereinabove or otherwise) heretofore, now or hereafter
made to or for the benefit of the Borrower pursuant to the Loan Agreement or
any other agreement, instrument or document executed pursuant to or in
connection therewith and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Pledgors and the Lender
hereby agree as follows:
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1. Pledge. Each Pledgor hereby pledges to the Lender, and grants
to the Lender a security interest in, the following (collectively, the "Pledged
Collateral"):
(a) the shares of the capital stock of the Borrower, now or at
any time or times hereafter owned by such Pledgor, and the certificates
representing the shares of such capital stock (as identified on Exhibit A
attached hereto and made a part hereof), all options and warrants for the
purchase of shares of the stock of the Borrower now or hereafter held in the
name of such Pledgor (all of said capital stock, options and warrants and all
capital stock held in the name of such Pledgor as a result of the exercise of
such options or warrants being hereinafter collectively referred to as the
"Pledged Stock"), herewith delivered to the Lender accompanied by stock powers
in the form of Exhibit B attached hereto and made a part hereof ("Powers") duly
executed in blank, and all dividends, cash, instruments and other property from
time to time received, receivable or otherwise distributed in respect of, or in
exchange for, any or all of such shares;
(b) all additional shares of stock of the Borrower from time to
time acquired by such Pledgor in any manner, and the certificates representing
such additional shares (any such additional shares shall constitute part of the
Pledged Stock and shall be listed on Exhibit A), and all options, warrants,
dividends, cash, instruments and other rights and options from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of such shares;
(c) the property and interests in property described in paragraph
3 below; and
(d) all proceeds of the foregoing.
2. Security for Liabilities. The Pledged Collateral secures the
prompt payment, performance and observance of (i) the Borrower's obligations
and liabilities under the Loan Agreement and the Loan Documents and (ii) each
Pledgor's obligations and liabilities under this Pledge Agreement and each
agreement, document or instrument executed pursuant to or in connection with
this Pledge Agreement (all such obligations and liabilities described in (i)
and (ii) above and now or hereafter existing being hereinafter referred to
collectively as the "Liabilities").
3. Pledged Collateral Adjustments. If, during the term of this
Pledge Agreement:
(a) any stock dividend, reclassification, readjustment or other
change is declared or made in the capital structure of the Borrower, or any
option included within the Pledged Collateral is exercised, or both, or
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(b) subscription warrants or any other rights or options shall be
issued in connection with the Pledged Collateral, then all new, substituted and
additional shares, warrants, rights, options or other securities, issued by
reason of any of the foregoing, shall be immediately delivered to and held by
the Lender under the terms of this Pledge Agreement and shall constitute
Pledged Collateral hereunder; provided, however, that nothing contained in this
paragraph 3 shall be deemed to permit any stock dividend, issuance of
additional stock, warrants, rights or options, reclassification, readjustment
or other change in the capital structure of the Borrower which is not expressly
permitted in the Loan Agreement.
4. Subsequent Changes Affecting Pledged Collateral. Each Pledgor
represents and warrants that it has made its own arrangements for keeping
informed of changes or potential changes affecting the Pledged Collateral
(including, but not limited to, rights to convert, rights to subscribe, payment
of dividends, reorganization or other exchanges, tender offers and voting
rights), and each Pledgor agrees that the Lender shall have no obligation to
inform any Pledgor of any such changes or potential changes or to take any
action or omit to take any action with respect thereto. The Lender may, after
the occurrence of an Event of Default, with notice and at its option, transfer
or register the Pledged Collateral or any part thereof into its or its
nominee's name with or without any indication that such Pledged Collateral is
subject to the security interest hereunder. In addition, the Lender may at any
time exchange certificates or instruments representing or evidencing Pledged
Shares for certificates or instruments of smaller or larger denominations.
5. Representations and Warranties. Each Pledgor represents and
warrants as follows:
(a) such Pledgor is the sole legal and beneficial owner of that
percentage of the issued and outstanding capital stock of the Borrower set
forth on Exhibit A, free and clear of any Lien except for the security interest
created by this Pledge Agreement;
(b) such Pledgor has full corporate power and authority to enter
into this Pledge Agreement;
(c) there are no restrictions upon the voting rights associated
with, or upon the transfer of, any of the Pledged Collateral except as set
forth in the Shareholders Agreement;
(d) such Pledgor has the right to vote, pledge and grant a
security interest in or otherwise transfer such Pledged Collateral free of any
Liens except as set forth in the Shareholders Agreement;
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(e) no authorization, approval, or other action by, and no notice
to or filing with, any governmental authority or regulatory body is required
either (i) for the pledge of such Pledgor's Pledged Collateral pursuant to this
Agreement or for the execution, delivery or performance of this Agreement by
such Pledgor or (ii) for the exercise by the Lender of the voting or other
rights provided for in this Agreement or the remedies in respect of the Pledged
Collateral pursuant to this Agreement (except as may be required (x) in
connection with such disposition by laws affecting the offering and sale of
securities generally and (y) by the FCC or PUC);
(f) the pledge of such Pledgor's Pledged Collateral pursuant to
this Pledge Agreement creates a valid and perfected first priority security
interest in such Pledged Collateral, in favor of the Lender, securing the
payment and performance of the Liabilities; and
(g) the Powers are duly executed and give the Lender the
authority they purport to confer.
6. Voting Rights. During the term of this Pledge Agreement, and
except as provided in this Section 6 below, each Pledgor shall have the right
to vote the Pledged Stock on all corporate questions in a manner not
inconsistent with the terms of this Pledge Agreement, the Loan Agreement and
any other agreement, instrument or document executed pursuant thereto or in
connection therewith. After the occurrence of an Event of Default, the Lender
may, at the Lender's option and following written notice from the Lender to the
Pledgors, exercise all voting powers pertaining to the Pledged Collateral.
7. Dividends and Other Distributions.
(a) So long as no Event of Default shall have occurred and be
continuing:
(i) Each Pledgor shall be entitled to receive and retain any and
all dividends and interest paid in respect of such Pledgor's Pledged Collateral
to the extent the Borrower is permitted to make such payments under the Loan
Agreement, provided, however, that any and all
(A) dividends and interest paid or payable other than in cash
with respect to, and instruments and other property received, receivable or
otherwise distributed with respect to, or in exchange for, any of the Pledged
Collateral;
(B) dividends and other distributions paid or payable in cash
with respect to any of the Pledged Collateral on account of a partial or total
liquidation or dissolution or in
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connection with a reduction of capital, capital surplus or paid-in surplus; and
(C) cash paid, payable or otherwise distributed with respect
to principal of, or in redemption of, or in exchange for, any of the Pledged
Collateral; shall be, and shall be forthwith delivered to the Lender to hold
as, Pledged Collateral and shall, if received by such Pledgor, be received in
trust for the Lender, be segregated from the other property or funds of such
Pledgor, and be delivered immediately to the Lender as Pledged Collateral in
the same form as so received (with any necessary endorsement); and
(ii) The Lender shall execute and deliver (or cause to be
executed and delivered) to each Pledgor all such proxies and other instruments
as such Pledgor may reasonably request for the purpose of enabling such Pledgor
to receive the dividends or interest payments which it is authorized to receive
and retain pursuant to paragraph (i) above.
(b) After the occurrence of an Event of Default:
(i) All rights of each Pledgor to receive the dividends and
interest payments which it would otherwise be authorized to receive and retain
pursuant to Section 7(a)(i) hereof shall cease, and all such rights shall
thereupon become vested in the Lender, which shall thereupon have the sole
right to receive and hold as Pledged Collateral such dividends and interest
payments;
(ii) all dividends and interest payments which are received by
each Pledgor contrary to the provisions of paragraph (i) of this Section 7(b)
shall be received in trust for the Lender, shall be segregated from other funds
of such Pledgor and shall be paid over immediately to the Lender as Pledged
Collateral in the same form as so received (with any necessary endorsements);
and
(iii) each Pledgor shall, upon the request of the Lender, at
Pledgor's expense, do or cause to be done all such other acts and things as may
be necessary to make such sale of such Pledgor's Pledged Collateral or any part
thereof valid and binding and in compliance with applicable law. Each Pledgor
will reimburse the Lender for all expenses incurred by the Lender, including,
without limitation, reasonable attorneys' and accountants' fees and expenses in
connection with the foregoing to the extent that such expenses relate to the
Pledgor's Pledged Collateral.
8. Transfers and Other Liens. Each Pledgor agrees that it will
not (i) sell or otherwise dispose of, or grant any option with respect to, any
of the Pledged Collateral without the
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prior written consent of the Lender, or (ii) create or permit to exist any Lien
upon or with respect to any of the Pledged Collateral, except for the security
interest under this Agreement.
9. Remedies.
(a) The Lender shall have, in addition to any other rights given
under this Pledge Agreement or by law, all of the rights and remedies with
respect to the Pledged Collateral of a secured party under the Uniform
Commercial Code as in effect in the State of New Jersey. In addition, after the
occurrence of an Event of Default, the Lender shall have such powers of sale
and other powers as may be conferred by applicable law. With respect to the
Pledged Collateral or any part thereof which shall then be in or shall
thereafter come into the possession or custody of the Lender or which the
Lender shall otherwise have the ability to transfer under applicable law, the
Lender may, in its sole discretion, without notice except as specified below,
after the occurrence of an Event of Default, sell or cause the same to be sold
at any exchange, broker's board or at public or private sale, in one or more
sales or lots, at such price as the Lender may deem best, for cash or on credit
or for future delivery, without assumption of any credit risk, and the
purchaser of any or all of the Pledged Collateral so sold shall thereafter own
the same, absolutely free from any claim, encumbrance or right of any kind
whatsoever. The Lender may, in its own name, or in the name of a designee or
nominee, buy the Pledged Collateral at any public sale and, if permitted by
applicable law, buy the Pledged Collateral at any private sale. In accordance
with the requirements of 47 C.F.R. Section 22.917 (1985), or any successor
provision thereto, the Lender shall notify the Borrower and the FCC in writing
at least ten (10) days prior to the repossession, in accordance with the Loan
Documents, of all or any part of the System which is subject to said
regulation. Each Pledgor shall be severally liable to the Lender for all
reasonable expenses (including, without limitation, court costs and reasonable
attorneys' and paralegals' fees and expenses) of, or incident to, the
enforcement of any of the provisions hereof. The Lender agrees to distribute
any proceeds of the sale of the Pledged Collateral in accordance with the Loan
Agreement.
(b) Unless any of the Pledged Collateral threatens to decline
speedily in value or is or becomes of a type sold on a recognized market, the
Lender will give the Pledgors reasonable notice of the time and place of any
public sale thereof, or of the time after which any private sale or other
intended disposition is to be made. Any sale of the Pledged Collateral
conducted in conformity with reasonable commercial practices of banks,
commercial finance companies, insurance companies or other financial
institutions disposing of property similar to the Pledged Collateral shall be
deemed to be commercially reasonable.
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<PAGE> 66
Notwithstanding any provision to the contrary contained herein, any
requirements of reasonable notice shall be met if such notice is received by
the Pledgors as provided in paragraph 19 below, at least five (5) Business Days
before the time of the sale or disposition. Any other requirement of notice,
demand or advertisement for sale is waived, to the extent permitted by law.
(c) In view of the fact that federal and state securities laws
may impose certain restrictions on the method by which a sale of the Pledged
Collateral may be effected after an Event of Default, the Pledgors agree that
after the occurrence of an Event of Default, the Lender may, from time to time,
attempt to sell all or any part of the Pledged Collateral by means of a private
placement restricting the bidders and prospective purchasers to those who are
qualified and will represent and agree that they are purchasing for investment
only and not for distribution. In so doing, the Lender may solicit offers to
buy the Pledged Collateral, or any part of it, from a limited number of
investors deemed by the Lender, in its reasonable judgment, to be financially
responsible parties who might be interested in purchasing the Pledged
Collateral. If the Lender solicits such offers from not less than three (3)
such investors, then the acceptance by the Lender of the highest offer obtained
therefrom shall be deemed to be a commercially reasonable method of disposing
of such Pledged Collateral.
(d) In connection with the enforcement by the Lender of any
remedies available to the Lender as a result of any Event of Default, each
Pledgor agrees to, and to use its best efforts to cause the Borrower to join
and cooperate fully, in each case at the Lender's election, with the Lender,
any receiver referred to below and/or the successor bidder or bidders at any
foreclosure sale in a filing of an application (and furnishing any additional
information that may be required in connection with such application) with the
FCC, the PUC and all applicable federal, state and local governmental
authorities, requesting their prior approval of (i) the operation or
abandonment of all or any portion of the System and/or (ii) the transfer of
control of the Borrower or assignment of all licenses, certificates,
authorizations, approvals and permits, issued to the Borrower by the FCC, the
PUC or any such authorities with respect to the System and the operation
thereof, to the receiver or to the successful bidder or bidders, including
without limitation, the Lender. In connection with the foregoing, each Pledgor
agrees to use its best efforts to cause the Borrower to take such further
actions, and execute all such instruments, as the Lender reasonably deems
necessary or desirable. Each Pledgor agrees that the Lender may enforce any
obligations of such Pledgor as set forth in this Paragraph by an action for
specific performance.
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(e) Notwithstanding any other provision of this Agreement to the
contrary, the exercise of any rights hereunder by the Lender that may require
FCC or PUC approval shall be subject to obtaining such approval. Pending
obtaining the FCC or PUC approval no Pledgor will do anything to delay, hinder,
interfere or obstruct the exercise of the Lender's rights hereunder in
obtaining such approvals.
(f) In connection with the exercise of its remedies under this
Agreement, Lender may, upon the occurrence of an Event of Default obtain the
appointment of a receiver or trustee to assume, upon receipt of all necessary
judicial, FCC or other governmental authority, consents or approvals, control
of or ownership of any Pledgor's Pledged Collateral. Such receiver or trustee
shall have all rights and powers provided to it by law or by court order or
provided to Lender under this Agreement. Upon the appointment of such trustee
or receiver, such Pledgor agrees to cooperate, to the extent necessary or
appropriate, in the expeditious preparation, execution and filing of an
application to the FCC or PUC for consent to the transfer of control or
assignment of the Construction Permits or the Operating Licenses or the
Certificate of the Borrower to the receiver or trustee.
10. Security Interest Absolute. All rights of the Lender and
security interests hereunder, and all obligations of the Pledgors hereunder,
shall be absolute and unconditional irrespective of:
(i) any lack of validity or enforceability of the Loan Agreement
or any other agreement or instrument relating thereto;
(ii) any change in the time, manner or place of payment of, or in
any other term of, all or any of the Liabilities, or any other amendment or
waiver of or any consent to any departure from the Loan Agreement;
(iii) any exchange, release or non-perfection of any other
collateral, or any release or amendment or waiver of or consent to departure
from any guaranty, for all or any of the Liabilities; or
(iv) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, any Pledgor in respect of the
Liabilities or of this Agreement.
11. Lender Appointed Attorney-in-Fact. Each Pledgor hereby
appoints the Lender its attorney-in-fact, with full authority, in the name of
such Pledgor or otherwise, after the occurrence of an Event of Default, from
time to time in the Lender's discretion, to take any action and to execute any
instrument which the Lender may deem necessary or advisable to accomplish the
purposes of this Pledge Agreement, including,
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without limitation, to receive, endorse and collect all instruments made
payable to such Pledgor representing any dividend, interest payment or other
distribution in respect of the Pledged Collateral or any part thereof and to
give full discharge for the same and to arrange for the transfer of all or any
part of the Pledged Collateral on the books of the Borrower to the name of the
Lender or the Lender's nominee.
12. Waivers. Each Pledgor waives presentment and demand for
payment of any of the Liabilities, protest and notice of dishonor or Event of
Default with respect to any of the Liabilities and all other notices to which
such Pledgor might otherwise be entitled except as otherwise expressly provided
herein or in the Loan Agreement.
13. Term. This Pledge Agreement shall remain in full force and
effect until the Liabilities and the obligations have been fully and
indefeasibly paid and satisfied and the Loan Agreement has terminated pursuant
to its terms. Upon the termination of this Pledge Agreement as provided above
(other than as a result of the sale of the Collateral), the Lender will release
the security interest created hereunder and will deliver the Pledged Stock and
the Powers to the appropriate Pledgors.
14. Definitions. The singular shall include the plural and vice
versa and any gender shall include any other gender as the context may require.
15. Successors and Assigns. This Pledge Agreement shall be
binding upon and inure to the benefit of the Pledgors, the Lender and their
respective successors and assigns. Each Pledgor's successors and assigns shall
include, without limitation, a receiver, trustee or debtor in possession of or
for such Pledgor.
16. Applicable Law; Severability. This Pledge Agreement shall be
governed by, and construed in accordance with, the internal laws (as opposed to
the conflict of laws provisions) and decisions of the State of New Jersey.
Whenever possible, each provision of this Pledge Agreement shall be interpreted
in such manner as to be effective and valid under applicable law, but, if any
provision of this Pledge Agreement shall be held to be prohibited or invalid
under applicable law, such provision shall be ineffective only to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Pledge Agreement. Furthermore, if
any term or provision hereof is held to be inconsistent with the Communications
Act of 1934, as amended, 47 U.S.C. 151 et seq., or with the Rules and
Regulations of the FCC, or otherwise illegal or invalid for any reason, such
provision shall not affect the remainder hereof, and the parties shall promptly
cooperate in good faith to modify this Agreement, so as
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to avoid any impairment of Lender's security interest in the Pledged
Collateral.
17. Further Assurances. Each Pledgor agrees that it will
cooperate with the Lender and will execute and deliver, or cause to be executed
and delivered, all such other stock powers, proxies, instruments and documents,
and will take all such other action, including, without limitation, the filing
of financing statements, as the Lender may reasonably request from time to time
in order to carry out the provisions and purposes of this Pledge Agreement.
18. The Lender's Duty of Care. The Lender shall not be liable for
any acts, omissions, errors of judgment or mistakes of fact or law including,
without limitation, acts, omissions, errors or mistakes with respect to the
Pledged Collateral, except for those arising out of or in connection with the
Lender's (i) gross negligence or willful misconduct, or (ii) failure to use
reasonable care with respect to the safe custody of the Pledged Collateral in
the Lender's possession. Without limiting the generality of the foregoing, the
Lender shall be under no obligation to take any steps necessary to preserve
rights in the Pledged Collateral against any other parties but may do so at its
option. All expenses incurred in connection therewith shall be for the sole
account of the Pledgors, who shall have several liability therefor, and shall
constitute part of the Liabilities secured hereby.
19. Notices. All notices and other communications required or
desired to be served, given or delivered hereunder shall be made in writing or
by a telecommunications device capable of creating a written record and shall
be addressed, if to any Pledgor, to the address set forth below the signature
line of such Pledgor, and
if to the Lender, c/o
AT&T Capital Corporation/Capital Markets Division
44 Whippany Road
Morristown, NJ 07962-1983
Attention: Operations Manager
Telecopy: (201) 397-4368
Confirmation: (201) 397-3429
with a copy to
AT&T Capital Corporation/Capital Markets Division
44 Whippany Road
Morristown, NJ 07962-1983
Attention: Chief Counsel
Telecopy: (201) 397-3165
Confirmation: (201) 397-4190
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or, as to each party, at such other address as designated by such party in a
written notice to the other party. All such notices and communications shall be
deemed to be validly served, given or delivered (i) three (3) days following
deposit in the United States mails, with proper postage prepaid; (ii) upon
delivery thereof if delivered by hand to the party to be notified; or (iii)
upon acknowledgment of receipt thereof if transmitted by such a
telecommunications device.
20. Effect on Shareholders Agreement. The Pledgors and the
Borrower hereby agree that, notwithstanding any contrary provision in the
Shareholders Agreement among the Pledgors and the Borrower, the Lender shall be
permitted to exercise any and all of its rights and remedies under this Pledge
Agreement, including, without limitation, the right to foreclose upon or sell
the Pledged Collateral, free and clear of any restriction on the Pledged
Collateral contained in the Shareholders Agreement.
21. Amendments, Waivers and Consents. No amendment or waiver of
any provision of this Agreement nor consent to any departure by any Pledgor
herefrom, shall in any event be effective unless the same shall be in writing
and signed by the Lender, and then such amendment, waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
22. Section Headings. The section headings herein are for
convenience of reference only, and shall not affect in any way the
interpretation of any of the provisions hereof.
23. Execution in Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall be an original, but all of
which shall together constitute one and the same agreement.
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IN WITNESS WHEREOF, the Pledgors and the Lender have executed
this Pledge Agreement as of the 20th day of December, 1993.
MERCURY, INC.
By:
-----------------------------------
Name:
Title:
Address: CM Tower, Suite 1495
One Lakeshore Drive
Lake Charles, LA 70602
Telecopy: (318) 433-0587
Confirmation: (318) 436-9000
--------------------------------------
David Bailey
Home
Address: 807 Church Street
Port Gibson, MS 39150
--------------------------------------
E. B. Martin, Jr.
Home
Address: 2306 Twin Lakes Circle
Jackson, MS 39211
Office
Address: Young, Scanlon, Sessums
P.O. Box 23059
Jackson, MS 39225-3059
Telecopy:(601) 355-6136
--------------------------------------
Robert Mounger
Home
Address: 4321 E. Manor Ct.
Jackson, MS 39502
Office
Address: 200 East Capitol Street
Suite 1601
Jackson, MS 39201
Telecopy:(601) 354-8329
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--------------------------------------
William M. Mounger, II
Home
Address: 1521 St. Ann Street
Jackson, MS 39202
Office
Address: 1410 Livingston Lane
Jackson, MS 39213-8003
Telecopy:(601) 362-2664
--------------------------------------
James Murrell
Home
Address: 107 Pondside Lane
Madison, MS 39110
Office
Address: c/o Jamie Planck
Martin Butler, Snow,
O'Mara, Stevens &
Cannada
17th Floor
Deposit Guaranty Plaza
Jackson, MS 39229-2567
Telecopy: (601) 949-4555
--------------------------------------
William M. Yandell, III
Home
Address: 6082 Woodway Drive
Memphis, TN 38120
Office
Address: 2600 Insurance Center Dr.
Suite 200
Jackson, MS 39216
Telecopy:(601) 362-4711
--------------------------------------
Wirt A. Yerger, III
Home
Address: 2125 Heritage Hills Dr.
Jackson, MS 39211
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Office
Address: 2600 Insurance Center Dr.
Suite 200A
Jackson, MS 39216
Telecopy: (601) 362-4711
AT&T CREDIT CORPORATION
By:
-----------------------------------
Name:
Title:
ACCEPTED AND AGREED TO
WITH RESPECT TO PARAGRAPH 20
MISSISSIPPI-34 CELLULAR CORPORATION
By:
-----------------------------------
Name:
Title:
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<PAGE> 74
ACKNOWLEDGMENT
The undersigned hereby acknowledges receipt of a copy of the
foregoing Pledge Agreement, agrees promptly to note on its books the security
interests granted under such Pledge Agreement, and waives any rights or
requirement at any time hereafter to receive a copy of such Pledge Agreement in
connection with the registration of any Pledged Collateral in the name of the
Lender or its nominee or the exercise of voting rights by the Lender.
MISSISSIPPI-34 CELLULAR CORPORATION
By:
-----------------------------------
Name:
Title:
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<PAGE> 75
EXHIBIT A
to
PLEDGE AGREEMENT
dated as of December 20, 1993
Pledged Stock Certificates
<TABLE>
<CAPTION>
Percentage of Shares of Capital
Issued and Outstanding Stock owned by
Capital Stock owned each Pledgor Subject
Name by each Pledgor to Pledge
<S> <C> <C>
Mercury, Inc. 51% ___
David Bailey 25% ___
E. B. Martin, Jr. 1.8% ___
Robert Mounger 3.3% ___
William M. Mounger, II 5.7% ___
James Murrell 1.8% ___
William M. Yandell, III 5.7% ___
Wirt A. Yerger, III 5.7% ___
</TABLE>
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<PAGE> 76
EXHIBIT B
to
PLEDGE AGREEMENT
dated as of December 20, 1993
Form of Stock Power
STOCK POWER
FOR VALUE RECEIVED, the undersigned does hereby sell, assign and
transfer to ________________________ ____________ Shares of Capital Stock of
Mississippi-34 Cellular Corporation, a Mississippi corporation, represented by
Certificate No. ___________ (the "Stock"), standing in the name of the
undersigned on the books of said corporation and does hereby irrevocably
constitute and appoint ________________________ as the undersigned's true and
lawful attorney, for it and in its name and stead, to sell, assign and transfer
all or any of the Stock, and for that purpose to make and execute all necessary
acts of assignment and transfer thereof; and to substitute one or more persons
with like full power, hereby ratifying and confirming all that said attorney or
substitute or substitutes shall lawfully do by virtue hereof.
Dated: ____________________
By:
-----------------------------------
Title:
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<PAGE> 77
EXHIBIT C
FORM OF CAPITAL NOTE
$ Parsippany, New Jersey
------------------- [Date]
FOR VALUE RECEIVED, the undersigned, MISSISSIPPI-34 CELLULAR
CORPORATION, a Mississippi corporation the "Borrower"), hereby unconditionally
promises to pay to the order of AT&T CREDIT CORPORATION, a Delaware corporation
(the "Lender"), at its office at 2 Gatehall Drive, Parsippany, New Jersey
07054, or at such other place as the holder of this Capital Note may from time
to time designate in writing, in lawful money of the United States of America
and in immediately available funds, the principal sum of ____________ Dollars
($________), together with interest on the principal balance remaining from
time to time unpaid at the rate provided below from the date such principal is
advanced until payment in full thereof. This Capital Note is referred to in and
was executed and delivered pursuant to Section 2.04 of that certain Loan and
Security Agreement dated as of December 20, 1993 by and between the Borrower
and the Lender (the "Loan Agreement"), to which reference is hereby made for a
statement of the terms and conditions under which the Capital Loans evidenced
hereby are being made and are to be repaid. All terms which are capitalized and
used herein (which are not otherwise specifically defined herein) and which are
defined in the Loan Agreement shall be used in this Capital Note as defined in
the Loan Agreement.
The principal indebtedness evidenced hereby shall be payable in
twenty-two (22) consecutive quarterly installments, as set forth on Schedule A
attached hereto. The principal amount hereof may be prepaid only in accordance
with the terms of the Loan Agreement.
Borrower further promises to pay interest on the outstanding
unpaid principal amount hereof which remains unpaid from the date hereof until
payment in full hereof at the per annum rate equal to the [FIXED RATE]
[VARIABLE RATE], payable quarterly in arrears on the Payment Dates and subject
to capitalization of the interest payable prior to the Commitment Termination
Date in accordance with the provisions of Section 2.05 of the Loan Agreement,
and calculated on the basis of a 360-day year comprised of twelve 30 day months,
compounded monthly; provided, however, that if the Borrower shall default in
the payment of the principal or interest hereof, the Borrower promises to, on
demand, pay interest on the entire unpaid
-76-
<PAGE> 78
principal amount hereof at a rate equal to four percent (4%) per annum above
the rate of interest that would otherwise be applicable, from the date such
payment is due to the date of actual payment, and if any other Event of Default
occurs and is continuing, the Borrower promises to, on demand, pay interest on
the entire unpaid principal amount hereof at a rate equal to two percent (2%)
per annum above the rate of interest that would otherwise be applicable, until
such Event of Default is cured.
If payment hereunder becomes due and payable on a Saturday,
Sunday, or legal holiday, under the laws of the State of New Jersey, the due
date thereof shall be extended to the next succeeding Business Day, and
interest shall be payable thereon during such extension at the rate specified
above. Checks, drafts or similar items of payment received by the Lender shall
not constitute payment until the same is honored by the Lender's depository
bank and final settlement thereof is reflected by irrevocable credit to the
Lender's account in such bank, but solely for the purpose of computing interest
earned by the Lender, credit shall be given to the Borrower on the Business Day
such item or payment is received by Lender. In no contingency or event
whatsoever shall interest charged hereunder, however such interest may be
characterized or computed, exceed the highest rate permissible under any law
which a court of competent jurisdiction shall, in a final determination, deem
applicable hereto. In the event that such a court determines that the Lender
has received interest hereunder in excess of the highest rate applicable
hereto, the Lender shall promptly refund such excess interest to Borrower.
Except as otherwise agreed in the Loan Agreement, payments
received by the Lender from the Borrower on this Capital Note shall be applied
first to the payment of interest which is due and payable and only thereafter
to the outstanding principal balance.
Presentment, protest and notice of nonpayment are hereby waived
by the Borrower.
This Capital Note shall be interpreted and the rights and
liabilities of the parties hereto determined in accordance with the internal
laws (as opposed to conflicts of law provisions) and decisions of the State of
New Jersey. Whenever possible each provision of this Capital Note shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Capital Note shall be prohibited by or invalid
under applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Capital Note. Whenever in this Capital Note
reference is made to the Lender or Borrower, such reference is made to include,
as applicable, a reference to their
-77-
<PAGE> 79
respective successors and assigns. The provisions of this Capital Note shall be
binding upon and inure to the benefit of said successors and assigns.
Borrower's successors and assigns shall include, without limitation, a
receiver, trustee or debtor in possession of or for the Borrower.
MISSISSIPPI-34 CELLULAR
CORPORATION
By:
----------------------------------
Its:
----------------------------------
-78-
<PAGE> 80
Schedule A
PAYMENT SCHEDULE
for
Capital Loan
Dated as of ________ __, 199_.
<TABLE>
<CAPTION>
Date of Payment Amount of Interest Amount of Principal
- --------------- ------------------ -------------------
<S> <C> <C>
</TABLE>
-79-
<PAGE> 81
EXHIBIT D
FORM OF EQUIPMENT NOTE
$ Parsippany, New Jersey
---------------------- [Date]
FOR VALUE RECEIVED, the undersigned, MISSISSIPPI-34 CELLULAR
CORPORATION, a Mississippi corporation (the "Borrower"), hereby unconditionally
promises to pay to the order of AT&T CREDIT CORPORATION, a Delaware corporation
(the "Lender"), at its office at 2 Gatehall Drive, Parsippany, New Jersey
07054, or at such other place as the holder of this Equipment Note may from
time to time designate in writing, in lawful money of the United States of
America and in immediately available funds, the principal sum of________
Dollars ($________), together with interest on the principal balance remaining
from time to time unpaid at the rate provided below from the date such
principal is advanced until payment in full thereof. This Equipment Note is
referred to in and was executed and delivered pursuant to Section 2.04 of that
certain Loan and Security Agreement dated as of December 20, 1993 by and
between the Borrower and the Lender (the "Loan Agreement"), to which reference
is hereby made for a statement of the terms and conditions under which the
Equipment Loans evidenced hereby are being made and are to be repaid. All terms
which are capitalized and used herein (which are not otherwise specifically
defined herein) and which are defined in the Loan Agreement shall be used in
this Equipment Note as defined in the Loan Agreement.
The principal indebtedness evidenced hereby shall be payable in
twenty-two (22) consecutive quarterly installments, as set forth on Schedule A
attached hereto. The principal amount hereof may be prepaid only in accordance
with the terms of the Loan Agreement.
Borrower further promises to pay interest on the outstanding
unpaid principal amount hereof which remains unpaid from the date hereof until
payment in full hereof at the per annum rate equal to the [Fixed Rate]
[VARIABLE RATE], payable quarterly in arrears on the Payment Dates and subject
to capitalization of the interest payable prior to the Commitment Termination
Date in accordance with the provisions of Section 2.05 of the Loan Agreement,
and calculated on the basis of a 360-day year comprised of twelve 30 day
months, compounded monthly; provided, however, that if the Borrower shall
default in the payment of the principal or interest hereof, the Borrower
promises to, on demand, pay interest on the entire unpaid principal amount
hereof at a rate equal to four percent (4%) per
-80-
<PAGE> 82
annum above the rate of interest that would otherwise be applicable, from the
date such payment is due to the date of actual payment, and if any other Event
of Default occurs and is continuing, the Borrower promises to, on demand, pay
interest on the entire unpaid principal amount hereof at a rate equal to two
percent (2%) per annum above the rate of interest that would otherwise be
applicable until such Event of Default is cured.
If payment hereunder becomes due and payable on a Saturday,
Sunday, or legal holiday, under the laws of the State of New Jersey, the due
date thereof shall be extended to the next succeeding Business Day, and
interest shall be payable thereon during such extension at the rate specified
above. Checks, drafts or similar items of payment received by the Lender shall
not constitute payment until the same is honored by the Lender's depository
bank and final settlement thereof is reflected by irrevocable credit to the
Lender's account in such bank, but solely for the purpose of computing interest
earned by the Lender, credit shall be given to the Borrower on the Business Day
such item or payment is received by the Lender. In no contingency or event
whatsoever shall interest charged hereunder, however such interest may be
characterized or computed, exceed the highest rate permissible under any law
which a court of competent jurisdiction shall, in a final determination, deem
applicable hereto. In the event that such a court determines that the Lender
has received interest hereunder in excess of the highest rate applicable
hereto, the Lender shall promptly refund such excess interest to Borrower.
Except as otherwise agreed in the Loan Agreement, payments
received by the Lender from the Borrower on this Equipment Note shall be
applied first to the payment of interest which is due and payable and only
thereafter to the outstanding principal balance.
Presentment, protest and notice of nonpayment are hereby waived
by the Borrower.
This Equipment Note shall be interpreted and the rights and
liabilities of the parties hereto determined in accordance with the internal
laws (as opposed to conflicts of law provisions) and decisions of the State of
New Jersey. Whenever possible each provision of this Equipment Note shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Equipment Note shall be prohibited by or invalid
under applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Equipment Note. Whenever in this Equipment
Note reference is made to the Lender or Borrower, such reference is made to
include, as applicable, a reference to their respective successors and assigns.
The provisions of this
-81-
<PAGE> 83
Equipment Note shall be binding upon and inure to the benefit of said
successors and assigns. Borrower's successors and assigns shall include,
without limitation, a receiver, trustee or debtor in possession of or for the
Borrower.
MISSISSIPPI-34 CELLULAR
CORPORATION
By:
-----------------------------------
Its:
-----------------------------------
-82-
<PAGE> 84
Schedule A
PAYMENT SCHEDULE
for
Equipment Loan
Dated as of ________ __, 199_.
<TABLE>
<CAPTION>
Date of Payment Amount of Interest Amount of Principal
- --------------- ------------------ -------------------
<S> <C> <C>
</TABLE>
-83-
<PAGE> 85
EXHIBIT E
DELIVERY AND ACCEPTANCE CERTIFICATE
To: AT&T Credit Corporation
Dated: ____________________
Gentlemen:
The undersigned, MISSISSIPPI-34 CELLULAR CORPORATION (the
"Borrower"), refers to that certain Loan and Security Agreement dated as of
December 20, 1993 (the "Loan Agreement"; the terms defined therein used herein
as therein defined) between AT&T Credit Corporation (the "Lender") and the
Borrower, and hereby certifies to the Lender, pursuant to the Loan Agreement,
that all of the equipment and related services as described in invoice no.
________ (the "Equipment") of [AMERICAN TELEPHONE AND TELEGRAPH COMPANY]
[________], has been delivered, inspected, installed, is in good working
condition, and accepted by the Borrower as satisfactory.
The undersigned hereby certifies that the following statements
are true on the date hereof:
(A) The representations and warranties contained in Article III
of the Loan Agreement and contained in the other Loan Documents are correct in
all respects as though made on the date hereof;
(B) No event has occurred and is continuing which constitutes
either an Event of Default or an event which but for the requirement that
notice be given and/or the elapse of time, would constitute an Event of
Default;
(C) After giving effect to the Loan to be made by the Lender to
the Borrower to finance the purchase of the Equipment, no event would occur
which would constitute either an Event of Default or an event which but for the
requirement that notice be given and/or the elapse of time, would constitute an
Event of Default; and
-84-
<PAGE> 86
(D) All agreements and all conditions contained in the Loan
Agreement or any other of the Loan Documents which are required to be performed
or satisfied by the Borrower on the date hereof in connection with the making
by the Lender of the Loan to finance the purchase of the Equipment have been
satisfied.
The undersigned requests that the Loan bear interest at the
[Fixed Rate] [Variable Rate].
Very truly yours,
MISSISSIPPI-34 CELLULAR
CORPORATION
By:
----------------------------------
Its:
----------------------------------
-85-
<PAGE> 87
EXHIBIT F
NOTICE OF BORROWING
IN RESPECT OF CAPITAL LOANS
To: AT&T Credit Corporation
Dated:
------------------------
Gentlemen:
The undersigned, MISSISSIPPI-34 CELLULAR CORPORATION (the
"Borrower"), refers to that certain Loan and Security Agreement dated as of
December 20, 1993 (the "Loan Agreement"; the terms defined therein used herein
as therein defined) between AT&T Credit Corporation (the "Lender") and the
Borrower, and hereby gives the Lender notice, irrevocably, pursuant to Section
2.03(b) of the Loan Agreement that the undersigned hereby requests a Capital
Loan under the Loan Agreement, and in that connection sets forth below the
information relating to such Capital Loan (the "Proposed Loan") as required by
Section 2.03(b) of the Loan Agreement:
(i) The Business Day of the Proposed Loan is ________, 199_;
(ii) The proceeds of the Proposed Loan are to be used for the
purposes as specified on Schedule A attached hereto;
(iii) The bank account into which the proceeds of the Proposed
Loan are to be transferred is account no. [Insert specific account number]
maintained at [Name Bank];
(iv) The ABA number of the above-referenced bank is _________,
and the name and address, phone and fax numbers of the contact person at such
bank, are as follows:
-------------------------------------------
-------------------------------------------
-------------------------------------------
Telephone Number:
--------------------------
Fax Number:
--------------------------------;
(v) The aggregate amount of the Proposed Loan is $ __________;
and
(vi) The Proposed Loan is to bear interest at the [FIXED RATE]
[VARIABLE RATE].
-86-
<PAGE> 88
The undersigned hereby certifies that the following statements
are true on the date hereof, and will be true on the Business Day of the
Proposed Loan:
(A) The representations and warranties contained in Article III
of the Loan Agreement and contained in the other Loan Documents are correct in
all material respects, before and after giving effect to the Proposed Loan and
to the application of the proceeds therefrom, as though made on as of such
date;
(B) No event has occurred and is continuing, or would result from
such Proposed Loan or from the application of the proceeds therefrom, which
constitutes either an Event of Default or an event which but for the
requirement that notice be given and/or the elapse of time, would constitute an
Event of Default; and
(C) All agreements and all conditions to the Proposed Loan,
contained in the Loan Agreement or any other of the Loan Documents which are
required to be performed or satisfied by the Borrower on the date hereof or by
the Business Day of the Proposed Loan have been and will be performed and
satisfied.
The undersigned hereby further certifies that in accordance with
Section 6.02 of the Loan Agreement the proceeds of the Proposed Loan shall be
used only for purposes specifically described in the Business Plan.
Very truly yours,
MISSISSIPPI-34 CELLULAR
CORPORATION
By:
--------------------------
Its:
-------------------------
-87-
<PAGE> 89
SCHEDULE A
[DESCRIBE THE PURPOSES FOR WHICH THE PROCEEDS
OF THE PROPOSED LOAN WILL BE USED]
-88-
<PAGE> 90
EXHIBIT G
BORROWER'S PRO FORMA BALANCE SHEET
[To be Attached]
-89-
<PAGE> 91
MS-34 Corporation
BALANCE SHEET
11/30/93
<TABLE>
<S> <C>
CURRENT ASSETS:
Cash 17,612.86
Accounts Receivable 76,821.87
Inventory
6,708.75
Prepaid Expenses 1,290.89
Other Current Assets 0.00
------------
TOTAL CURRENT ASSETS 102,434.37
PROPERTY, PLANT & EQUIPMENT 3,501,067.53
Less: Accumulated Depreciation (50,160.00)
------------
3,450,907.53
------------
OTHER LONG TERM ASSETS 3,144,388.28
------------
TOTAL ASSETS 6,697,730.18
============
</TABLE>
<PAGE> 92
MS-34 Corporation
BALANCE SHEET
11/30/93
<TABLE>
<S> <C>
CURRENT LIABILITIES:
Current Maturities Debt 520,000.00
Accounts Payable 245,200.57
Accrued Expenses 11,800.77
Deposits and Other C/L 3,186,349.35
------------
TOTAL CURRENT LIABILITIES 3,963,350.69
NOTES PAYABLE: 50,000.00
------------
TOTAL LIABILITIES 4,013,350.69
------------
EQUITY:
Cash Received - Owners 3,290,416.00
Common Stock 100.00
Retained Earnings (606,136.51)
TOTAL EQUITY 2,684,379.49
------------
------------
TOTAL LIABILITIES & EQUITY 6,697,730.18
============
</TABLE>
<PAGE> 93
MS-34 Corporation
CASH IN BANKS AND ON HAND
As of 11/30/93
<TABLE>
<S> <C>
CASH
Petty Cash on Hand 200.00
Petty Cash - DGNB 1,896.29
CMNB - Cash Account 3,346.54
DGNB - Deposit Account 538.27
Depository 11,531.76
CMNB - Savings Account 100.00
---------
TOTAL CASH 17,612.86
=========
---------
ESCROW CASH 0.00
=========
ACCOUNTS RECEIVABLE
Net Settlement 29,647.25
A/R Local Subscribers 21,257.93
Equipment Lease Purchase 0.00
A/R Foreign Carriers 29,598.94
A/R Other (3,682.25)
---------
TOTAL RECEIVABLES 76,821.87
=========
INVENTORY
Inv - Phones Held for Sale 5,285.95
Inv - Accessories 1,422.80
----------
TOTAL INVENTORY 6,708.75
==========
PREPAID EXPENSES
Prepaid Insurance 90.89
Prepaid Fees\Licenses 1,200.00
----------
TOTAL PREPAID 1,290.89
==========
OTHER CURRENT ASSETS
----------
OTHER CURRENT ASSETS 0.00
==========
</TABLE>
<PAGE> 94
<TABLE>
<S> <C>
PROPERTY, PLANT & EQUIPMENT
Construction in Process 2858,075.48
MTSO 56,135.00
Grenada Cellsite Equipment 517,257.20
Greenwood Cellsite Equipment 816.00
Building - Grenada 41,724.00
Office Equipment 12,913.16
Furniture & Fixtures 8,261.69
Leasehold Improvements - Office 4,429.80
Computer Equipment 1,455.20
ACC/Depr - Cell Cites (49,037.00)
ACC/Depr - Office Equip & Furn (1,123.00)
------------
TOTAL PLANT & EQUIPMENT 3,450,907.53
============
OTHER LONG TERM ASSETS
Deposits 1,840.00
Investment in License 3,221,781.00
Capitalized Loan Costs 41,584.00
Accumulated Amortization (120,816.72)
------------
TOTAL OTHER LONG TERM ASSETS 3,144,388.28
============
</TABLE>
<PAGE> 95
<TABLE>
<S> <C>
CURRENT PORTION OF LONG TERM DEBT
Due to Cameron Communications 20,000.00
N/P - DGNB 500,000.00
------------
TOTAL CUR - LONG TERM DEBT 520,000.00
============
ACCOUNTS PAYABLE
A/P - Trade 233,154.62
Sales Tax Payable - MS 0.00
Excise Tax Payable - Federal 8.68
City Tax Payable 0.00
E911 Service Charge 11.75
Due To Mercury Communications 12,025.52
------------
TOTAL ACCOUNTS PAYABLE 245,200.57
============
ACCRUED EXPENSES
Accrued Interest 11,800.77
------------
TOTAL ACCRUED EXPENSES 11,800.77
============
CUSTOMER DEPOSITS & OTHER CURRENT LIABILITIES
Escrow Deposit Payable 1,900.00
Deposit Interest Payable 13.42
Other Current Liabilities 3,184,435.93
------------
TOTAL OTHER CUR. LIABILITIES 3,186,349.35
============
LONG TERM LIABILITIES
L/T Note Stockholders 50,000.00
------------
TOTAL LONG TERM LIABILITIES 50,000.00
============
SHAREHOLDERS' EQUITY
Paid in Capital 3,290,416.00
Common Stock 100.00
Retained Earnings (107,190.17)
Current Year Earnings (Loss) (498,946.34)
------------
Total Shareholder's Equity 2,684,379.49
============
</TABLE>
<PAGE> 96
MISSISSIPPI 34 CELLULAR
PROFIT & LOSS STATEMENT
For the month ending 11/30/93
<TABLE>
<CAPTION>
Reporting Period Year to date
<S> <C> <C>
REVENUES:
Monthly Service & Airtime 4,058.99 9,029.52
Vertical Services 24.00 44.00
Toll Revenue 209.57 597.63
Roamer Pass Through 1,873.24 5,165.70
Non-Recurring Revenue 1,150.00 2,500.00
Roamer Revenue Foreign 22,011.28 133,621.16
Equipment Sales 6,259.16 16,293.72
Billing Adjustments 221.74 1,205.47
---------- ----------
TOTAL REVENUES 35,807.98 168,457.20
---------- ----------
EXPENSES:
Cost of Equipment Sold 8,448.58 25,191.26
Plant Operations 4,386.32 94,626.73
Customer Usage Expenses 7,235.56 23,246.44
Shared System Services 0.00 5,965.72
Depreciation & Amortization 17,462.08 158,490.72
General & Administrative Expense 5,502.56 156,241.03
Management Fees 24,000.00 151,000.00
Sales & Marketing 4,212.56 27,841.28
---------- ----------
Total Operating Expenses 71,247.66 642,603.18
---------- ----------
OTHER INCOME/EXPENSE 2,980.01 24,800.36
---------- ----------
NET INCOME BEFORE TAXES (38,419.69) (498,946.34)
---------- ----------
FEDERAL INCOME TAXES 0.00 0.00
---------- ----------
NET INCOME (38,419.69) (498,946.34)
========== ==========
</TABLE>
<PAGE> 97
EXHIBIT H
FORM OF
MISSISSIPPI-34 CELLULAR CORPORATION'S
SECRETARY'S CERTIFICATE
OF
BOARD OF DIRECTORS RESOLUTIONS
I, William M. Mounger, II, DO HEREBY CERTIFY that I am the
Secretary of Mississippi-34 Cellular Corporation (the "Corporation"), a
corporation duly organized and existing under and by virtue of the laws of the
State of Mississippi and am keeper of the records and seal thereof; that the
following is a true, correct and compared copy of the recitals and resolutions
duly adopted by the unanimous consent of all of the members of the Board of
Directors of said Corporation on _____, 1993, and that said recitals and
resolutions are still in full force and effect and have not been modified or
rescinded.
NOW, THEREFORE, BE IT RESOLVED, that William L. Henning, Jr. or
any other officer of the Corporation be and hereby is authorized and empowered
(either alone or in conjunction with any one or more of the other officers of
the Corporation) to take, from time to time, all or any part of the following
action on or in behalf of the Corporation to (A) execute and deliver to AT&T
Credit Corporation ("Lender"), (i) a Loan and Security Agreement ("Loan
Agreement"), (ii) promissory notes ("Notes"), in favor of Lender evidencing the
Corporation's agreement repay the loans made pursuant to the Loan Agreement,
(iii) Mortgages ("Mortgages") in favor of Lender evidencing the mortgage of the
real property of the Corporation to Lender, and (iv) all UCC financing
statements and all other agreements, documents and instruments, including, but
not limited to, financing statements, contemplated by the Loan Agreement
(collectively, the "Other Documents"); said Loan Agreement, Notes, Mortgages,
and Other Documents to be substantially in the form of those presented to the
Board of Directors of the Corporation, with such additional, modified or
revised terms as may be acceptable to such officer, as conclusively evidenced
by his or her execution thereof; and (B) to carry out, modify, amend or
terminate any arrangements or agreements at any time existing between the
Corporation and the Lender.
FURTHER RESOLVED, that all acts and deeds heretofore done by any
director, officer or officers of the Corporation for and on behalf of the
Corporation in entering into, executing, acknowledging or attesting any
arrangements, security agreements,
<PAGE> 98
agreements, instruments or documents, or in carrying out the terms and
intentions of these resolutions, are hereby ratified, approved and confirmed.
I DO FURTHER CERTIFY, that the following named persons are the
President, Senior Vice President, Vice President, Secretary and Treasurer of
the Corporation, duly elected, qualified and acting as such; that the
signatures appearing opposite the names of such officers are authentic and
genuine and are, in fact, the signatures of such officers:
President:
William L. Henning, Jr.
----------------------------------
Vice President
Robert Piper
----------------------------------
Secretary:
William M. Mounger, II
----------------------------------
Treasurer:
William M. Yandell
----------------------------------
I DO FURTHER CERTIFY, that the Corporation's Articles of
Incorporation certified by the Secretary of State of Mississippi, attached
hereto as Exhibit A and incorporated herein by this reference thereto, has not
been amended since the date of the last amendment thereto indicated on such
Secretary of State's Certificate.
I DO FURTHER CERTIFY, that the Corporation's By-Laws, attached
hereto as Exhibit B and incorporated herein by this reference thereto, are
true, accurate and complete as of the date hereof.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the
Seal of the Corporation at this day of , 1993.
------------- ------- -------
-----------------------------
William M. Mounger, II
Secretary
AFFIX CORPORATE SEAL
-91-
<PAGE> 99
EXHIBIT I-1
FORM OF OPINION OF BORROWER'S SPECIAL COUNSEL
Attached.
-92-
<PAGE> 100
[BRUNINI, GRANTHAM, GROWER & HEWES LETTERHEAD]
December 30, 1993
AT&T Credit Corporation
2 Gatehall Drive
Parsippany, NJ 07054
RE: Loans to Mississippi-34 Cellular Corporation
Ladies and Gentlemen:
We have acted as special local counsel for Mississippi-34 Cellular
Corporation, a Mississippi corporation ("Borrower"), in connection with the
transactions evidenced by the following documents of even date herewith: (i)
that certain Loan and Security Agreement ("Loan Agreement") between Borrower
and AT&T Credit Corporation ("Lender"), (ii) that certain Equipment Note
executed by Borrower and payable to Lender in the original principal amount of
$2,138,836.03, (iii) that certain Capital Note executed by Borrower and payable
to Lender in the original principal amount of $1,684,987.01, (iv) that certain
Deed of Trust, Security Agreement, Financing Statement and Assignment of Rents
and Leases (the "Mortgage"), covering the premises referred to on Exhibit A
attached hereto (the "Premises") and executed by Borrower for the benefit of
Lender with respect to the real property located in Holmes County, Mississippi,
(v) those certain Uniform Commercial Code Financing Statements, copies of which
have been provided to us ("Financing Statements"), and (vi) those certain
Uniform Commercial Code Fixture Filings, copies of which are attached hereto as
Exhibit C. This opinion is being delivered to you pursuant to Section 4.01 (e)
of the Loan Agreement. Capitalized terms not otherwise defined herein shall
have the meanings given to such terms in the Loan Agreement.
In connection with this opinion we have examined originals or copies,
certified or otherwise identified to our satisfaction, of the documents and
instruments listed in items (i) through (vi) above (such documents being
hereinafter referred to, collectively, as the "Loan Documents").
For the purposes of rendering this opinion we have also investigated
such questions of law and have examined such corporate
<PAGE> 101
AT&T Credit Corporation
December 30, 1993
Page 2
documents or records of the Borrower, certificates and representations of
public officials and such other documents as in our judgment are necessary or
appropriate to enable us to render the opinions expressed below. In addition,
we have assumed (i) the genuineness of the signatures and authority of persons
signing all documents in connection with which this opinion is rendered, (ii)
the authenticity of all documents submitted to us as originals, (iii) the
conformity to authentic original documents of all documents submitted to us as
certified, conformed or photostatic copies, (iv) the power and authority of the
Borrower and the Lender to enter into and perform their respective obligations
under the Loan Documents, (v) that the Loan Documents have been properly
executed and delivered by the appropriate parties, (vi) that Borrower has title
to the Premises and to the other property being secured, (vii) at least one of
the Loans has been accomplished and funds advanced to the Borrower in
transactions substantially contemporaneous with the execution of the Loan
Documents, and (viii) the Loan Documents, except for the Mortgage as to which
we render our opinion herein, are, under all applicable laws other than the
laws of Mississippi, valid and binding obligations of the parties thereto,
enforceable in accordance with their respective terms. For purposes of this
opinion "substantially contemporaneous" means by overnight delivery of
documents with funding upon full execution of the Loan Documents.
Based upon the foregoing, we are of the opinion that:
1. The Mortgage is in proper form:
(a) for the creation of the mortgage lien contemplated thereby against
the interest of the Borrower in the Premises and
(b) for recording in the real property records of the recording office
in the County in which the Premises are located.
2. The Mortgage, when executed and delivered by the Borrower, shall
constitute the valid and binding obligation of the Borrower, enforceable in
accordance with its terms, except as limited by liquidation, conservatorship,
insolvency, bankruptcy, reorganization, moratorium, the doctrine of commercial
reasonableness and other similar debtor relief statutes and case law of general
application affecting creditors' rights generally from time to time in effect,
applicable laws and judicial decisions that affect the availability of the
remedy of specific performance and the application of equitable principles, and
applicable federal and state laws, statutes, judicial decisions, ordinances,
rules and regulations that may modify, limit, render unenforceable or delay
certain rights and remedies of Lender, but which, in our opinion (except for the
economic consequences of any delay imposed by reason of the application or
interpretation of any such laws,
<PAGE> 102
AT&T Credit Corporation
December 30, 1993
Page 3
statutes, judicial decisions, ordinances, rules and regulations), will not
render the Mortgage inadequate for the practical realization of the benefits
intended to be conferred by the Borrower to the Lender.
3. The Mortgage contains the terms and provisions necessary to
enable the Lender, following a default under the Mortgage, to foreclose in the
manner customarily available to a real estate lienholder under the laws of the
State.
4. No recording, filing, privilege or other tax must be paid in
connection with the execution, delivery, recordation or enforcement of the
Mortgage.
5. On the date the Mortgage is filed in the Chancery Clerk's office
for Holmes County, Mississippi, and assuming that on the date of such filing no
mortgages, liens or encumbrances against the Premises are of record, and
further assuming the absence of knowledge of any mortgage, lien or other
encumbrances, then excluding both real estate taxes which are not then due and
payable and unmatured mechanic's liens, the Mortgage will create a valid and
continuing first lien and encumbrance against the Premises to secure the
Liabilities (as defined in the Mortgage), subject to no other mortgages, liens
or encumbrances. Our opinion with regard to the priority of the lien of the
Mortgage with respect to future advances is qualified in that (a) the lien on
any property acquired by the mortgagor after the filing of a federal tax lien
pursuant to Section 6323 of the Internal Revenue Code of 1986, as amended or a
lien of the Pension Benefit Guaranty Corporation pursuant to Section 4068 of
ERISA has priority over such tax lien or ERISA lien only if acquired before the
46th day following such filing and (b) such lien has priority over such tax
liens and ERISA liens only to the extent future advances are made before the
earlier of the 46th day after such tax liens or ERISA liens are filed or the
time that the Lender has actual notice or actual knowledge that such tax liens
or ERISA liens were filed.
6. The foreclosure of the Mortgage will not in any manner restrict,
affect or impair the Borrower's liability with respect to the indebtedness
secured thereby or the Lender's rights or remedies with respect to the
foreclosure or enforcement of any other security interests or liens securing
such indebtedness, to the extent of any deficiency. The Mortgagee's ability to
recover a deficiency judgment after foreclosure, as provided in Section 7 of
the Mortgage, is not absolute and will depend, among other things, on whether
all aspects of the foreclosure were commercially reasonable and whether a court
determines, under the particular facts and circumstances, that it would be
equitable to grant a deficiency. The amount of the deficiency, under decisional
law of the state, may be determined by reference to the fair market value
<PAGE> 103
AT&T Credit Corporation
December 30, 1993
Page 4
of the property rather than by the amount bid at a foreclosure sale.
7. The law (statutory or otherwise) of the State of Mississippi does
not require a lienholder to make an election of remedies where such lienholder
holds security interests and liens on both the real and the personal property
of a debtor or to take recourse first or solely against its collateral.
8. If the law of the State of Mississippi were to govern the
legality of the interest and other amounts to be paid and received by the
Lender as compensation for the loans and other extensions of credit that are
secured by the Mortgage, the interest and other obligations secured by the
Mortgage would not be usurious under the laws of the State of Mississippi.
9. The Borrower does not have a right of redemption under the laws
of the State of Mississippi.
10. The Financing Statements are in proper form for filing and,
assuming that the Financing Statements have been duly executed and delivered by
the Borrower and have been filed in the recording offices noted on such
Financing Statements, the security interests intended to be created pursuant to
the Loan Agreement, to the extent that the filing of a financing statement in
the State of Mississippi is effective to perfect the security interests granted
in the Collateral, constitute perfected and continuing security interests under
the Uniform Commercial Code as adopted in the State.
11. The Fixture Filings are in proper form for filing and, assuming
that the Fixture Filings have been duly executed and delivered by the Borrower
and have been filed in the recording offices noted on such Fixture Filings, the
security interest intended to be created pursuant to the Loan Agreement in the
Borrower's fixtures constitute perfected security interests under the Uniform
Commercial Code as adopted in the State.
12. No approval by, authorization of, or filing with the State of
Mississippi, or any municipal or other governmental commission, board, agency
or other governmental authority that is a subdivision of the State of
Mississippi is necessary in connection with the execution and delivery of the
Loan Documents and the performance of the obligations thereunder. No additional
approval by, authorization of, or filing with the State of Mississippi, or any
municipal or other governmental commission, board, agency or other governmental
authority that is a subdivision of the State of Mississippi is necessary in
connection with the construction or operation of the System which was
originally authorized by the Mississippi Public Service Commission in the
Franchise Area other
<PAGE> 104
AT&T Credit Corporation
December 30, 1993
Page 5
than municipal construction permits and immaterial business licenses. In giving
the opinion set forth in this paragraph 12, we have relied on the Special
Closing Certificate attached hereto.
We are admitted to the practice of law only in the State of Mississippi
and do not represent ourselves as being knowledgeable in the laws of any other
jurisdiction and, accordingly, this opinion should not be considered applicable
to any matters under the laws of any jurisdiction other than the United States
and the State of Mississippi.
This opinion letter is provided for the purposes of complying with
requirements of the Loan Documents referred to herein and this opinion may not
be relied upon by any person, firm or entity whatsoever other than the entity
addressed and its legal counsel without our prior written consent.
This opinion is rendered as of the date hereof, and we undertake no, and
hereby disclaim any, obligation to advise you of any changes in or developments
that might affect any matters or opinions set forth herein.
Sincerely,
BRUNINI, GRANTHAM, GROWER & HEWES
/s/ JAMES T. THOMAS, IV
James T. Thomas, IV
<PAGE> 105
EXHIBIT I-2
FORM OF OPINION OF BORROWER'S LOCAL COUNSEL
Attached.
-93-
<PAGE> 106
[BRUNINI, GRANTHAM, GROWER & HEWES LETTERHEAD]
December 30, 1993
AT&T Credit Corporation
2 Gatehall Drive
Parsippany, NJ 07054
RE: Loans to Mississippi-34 Cellular Corporation
Ladies and Gentlemen:
We have acted as counsel for Mississippi-34 Cellular Corporation, a
Mississippi corporation ("Borrower"), and Mercury, Inc., David E. Bailey, E. B.
Martin, Jr., Robert Mounger, William M. Mounger, II, James Murrell, William M.
Yandell, III and Wirt A. Yerger, III, the shareholders of Borrower's capital
stock (the "Shareholders"), in connection with the transactions evidenced by
the following documents of even date herewith:(i) that certain Loan and
Security Agreement ("Loan Agreement") between Borrower and AT&T Credit
Corporation ("Lender"), (ii) that certain Equipment Note executed by Borrower
and payable to Lender in the original principal amount of $2,138,836.03, (iii)
that certain Capital Note executed by Borrower and payable to Lender in the
original principal amount of $1,684,987.01, (iv) that certain Deed of Trust,
Security Agreement, Financing Statement and Assignment of Rents and Leases
("Mortgage") executed by the Borrower for the benefit of Lender with respect to
the real property located in Holmes County, Mississippi, (v) Pledge Agreement
executed by the Shareholders for the benefit of Lender (the "Pledge"), (vi)
those certain UCC financing statements, copies of which have been provided to
us, and (vii) that certain Subordination Agreement executed by Cameron
Communications Corporation, William Yandell, Wirt A. Yerger, III, William
Mounger and Robert Mounger for the benefit of Lender, all as executed in
connection with the transactions contemplated by the foregoing. This opinion is
being delivered to you pursuant to Section 4.01(e) of the Loan Agreement.
Capitalized terms not otherwise defined herein shall have the meanings given to
such terms in the Loan Agreement.
In connection with this opinion we have examined originals or copies,
certified or otherwise identified to our satisfaction, of the documents and
instruments listed in items (i) through (vi)
<PAGE> 107
AT&T Credit Corporation
December 30, 1993
Page 2
above (such documents being hereinafter referred to, collectively, as the "Loan
Documents").
For the purposes of rendering this opinion we have also investigated
such questions of law and have examined such corporate documents or records of
the Borrower or the Shareholders, certificates and representations of public
officials and such other documents as in our judgment are necessary or
appropriate to enable us to render the opinions expressed below. In addition,
we have assumed (i) the genuineness of the signatures and authority of persons
signing all documents in connection with which this opinion is rendered, other
than the signatures of officers of the Borrower or the Shareholders, (ii) the
authenticity of all documents submitted to us as originals, (iii) the
conformity to authentic original documents of all documents submitted to us as
certified, conformed or photostatic copies, (iv) the power and authority of the
Lender to enter into and perform its obligations under the Loan Documents, and
(v) at least one of the Loans has been accomplished and funds advanced to the
Borrower in transactions substantially contemporaneous with the execution of
the Loan Documents. For purposes of this opinion "substantially
contemporaneous" means by overnight delivery of documents with funding upon
full execution of the Loan Documents.
Based upon the foregoing, we are of the opinion that:
1. The Borrower is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Mississippi and has all
requisite corporate power and authority to own and operate its properties and
to carry on its business as presently conducted and is qualified to do business
under the laws of the State of Mississippi.
2. The execution, delivery and performance by the Borrower of each
Loan Document to which it is a party are within the corporate power of the
Borrower, have been duly authorized by all necessary corporate action on the
part of the Borrower, and do not contravene (i) the Articles of Incorporation
or bylaws of the Borrower, or (ii) any law or regulation or, to the best of our
knowledge any order, writ, judgment, decree, determination or award presently
in effect having applicability to the Borrower.
3. To the best of our knowledge and belief there is no default by
Borrower, or any other party under any material contract, lease, agreement,
instrument or commitment to which Borrower is a party. We call to your
attention that Borrower has an outstanding loan with Deposit Guaranty National
Bank. It is our understanding that this obligation is to be paid from the
proceeds of your loan to Borrower.
<PAGE> 108
AT&T Credit Corporation
December 30, 1993
Page 3
4. The Loan Documents to which the Borrower is a party have been duly
executed and delivered by the Borrower and each constitutes a legal, valid and
binding obligation of Borrower enforceable in accordance with its terms, except
as enforceability may be limited by liquidation, conservatorship, insolvency,
bankruptcy, reorganization, moratorium, the doctrine of commercial
reasonableness and other similar debtor relief statutes and case law of general
application affecting creditors' rights generally from time to time in effect,
applicable laws and judicial decisions that affect the availability of the
remedy of specific performance and the application of equitable principles, and
applicable federal and state laws, statutes, judicial decisions, ordinances,
rules and regulations that may modify, limit, render unenforceable or delay
certain rights and remedies of Lender, but which, in our opinion (except for
the economic consequences of any delay imposed by reason of the application or
interpretation of any such laws, statutes, judicial decisions, ordinances,
rules and regulations), will not render the Loan Documents inadequate for the
practical realization of the benefits intended to be conferred by the Borrower
to the Lender. We are aware that the Loan Agreement and the Pledge contain
provisions whereby such agreements will be governed by the laws of a state other
than Mississippi. In giving our opinion in this paragraph regarding the
enforceability of these agreements, we have assumed that the applicable laws of
such other state or states are the same as the laws of Mississippi.
5. The Pledge has been duly executed and delivered by the Shareholders
and constitutes the legal, valid and binding obligations of the Shareholders,
except as enforceability may be limited by liquidation, conservatorship,
insolvency, bankruptcy, reorganization, moratorium, the doctrine of commercial
reasonableness and other similar debtor relief statutes and case law of general
application affecting creditors' rights generally from time to time in effect,
applicable laws and judicial decisions that affect the availability of the
remedy of specific performance and the application of equitable principles, and
applicable federal and state laws, statutes, judicial decisions, ordinances,
rules and regulations that may modify, limit, render unenforceable or delay
certain rights and remedies of Lender, but which, in our opinion (except for
the economic consequences of any delay imposed by reason of the application or
interpretation of any such laws, statutes, judicial decisions, ordinances,
rules and regulations), will not render the Pledge inadequate for the practical
realization of the benefits intended to be conferred by the Borrower to the
Lender. We are aware that the Pledge contains provisions whereby such agreement
will be governed by the laws of a state other than Mississippi. In giving our
opinion in this paragraph regarding the enforceability of the Pledge we have
assumed that the applicable laws of such other state are the same as the laws
of Mississippi.
<PAGE> 109
AT&T Credit Corporation
December 30, 1993
Page 4
6. Assuming Lender has given value and Borrower has rights in the
Collateral, the security interests in the Collateral granted in the Loan
Agreement are valid and continuing security interests in those items and types
of Collateral described in the Loan Agreement in which a security interest may
be created under Article 9 of the UCC as in effect in Mississippi. However, the
reference to "general intangibles" in Section 7.01 of the Loan Agreement is
likely too vague to create a security interest except to the extent any general
intangible is more specifically identified in Section 7.01 of the Loan
Agreement.
We have not made, or undertaken to make, any investigation of title to
the Collateral (real or personal) covered by the Loan Documents, or the
accuracy of any description thereof, and we express no opinion with respect
thereto. We understand that you are relying on other evidence of title to the
Collateral and that you have secured Certificates of Title as to real estate.
7. Assuming Lender has given value and the Shareholders own the
Pledged Stock, the Pledge creates valid and continuing security interests in
favor of Lender in the "Pledged Stock" as that term is defined in the Pledge,
and upon delivery of the Pledged Stock to the Lender, the Lender will have a
perfected first priority security interest in all the presently outstanding
Pledged Stock. No filing is required in Mississippi to perfect the security
interest in the Pledged Stock. Rather, perfection may be accomplished solely by
Lender's possession thereof.
8. No consent or approval or other action by, any United States
federal or state regulatory authority (other than the FCC or PUC with respect
to which you are receiving a separate opinion) or other person or entity which
has not been obtained or taken, is required, in connection with the execution,
delivery or performance of the Loan Documents by Borrower or the Shareholders.
9. To the best of our knowledge and belief Borrower has all material
licenses necessary for the operation of the Business and has otherwise complied
with all material laws and ordinances regulating or governing the operation of
Borrower's business, except to the extent that the failure to comply therewith
would not, in the aggregate, have a material adverse effect on the business,
operations, assets (taken in the aggregate) or present or prospective financial
condition of Borrower and would not materially adversely affect the ability of
Borrower to perform its obligations under the Loan Documents. We express no
opinion as to Borrower's compliance or non-compliance with any environmental
laws, rules, orders, regulations or agreements in connection with the conduct
of its business or ownership or use of its real or personal property or as to
any liability incurred or to be incurred as a result thereof.
<PAGE> 110
AT&T Credit Corporation
December 30, 1993
Page 5
10. To the best of our knowledge, there is no pending or threatened
action, suit or proceeding against the Borrower or any of its assets or
properties before any court, governmental agency or arbitrator.
We express no opinion herein as to the enforceability of (a)
provisions which purport to confer self-help remedies or equitable remedies,
such as specific performance and injunctive relief, (b) provisions that purport
to establish evidentiary standards for suits or proceedings, (c) provisions for
waivers in advance by any party, (d) provisions for the granting of a power of
attorney by the Borrower, (e) provisions providing for indemnity to the extent
such provisions provide for indemnity other than as a result of acts or
omissions of Borrower, consent judgments or delay or omission of enforcement of
remedies, (f) provisions regarding consent to jurisdiction or venue, (g)
provisions relating to the appointment of a receiver, to the extent the
appointment of a receiver is governed by applicable statutory requirements and
decisional law and to the extent any such provision may not be in compliance
with any statutory requirements or decisional law, or (h) provisions
restricting oral modification or termination of any agreement.
Whenever our opinion herein with respect to the existence or absence
of facts is indicated to be "to the best of our knowledge," it is intended to
signify that during the course of our representation of the Borrower no
information has come to our attention which would give us actual knowledge
contrary to such statement. However, except to the extent expressly set forth
herein, we have not undertaken any independent investigation to determine the
existence or absence of such facts, and no inference as to our knowledge of the
existence or absence of such facts should be drawn from our representation of
the Borrower.
We are admitted to the practice of law only in the State of
Mississippi and do not represent ourselves as being knowledgeable in the laws
of any other jurisdiction and, accordingly, this opinion should not be
considered applicable to any matters under the laws of any jurisdiction other
than the United States and the State of Mississippi.
This opinion letter is provided for the purposes of complying with
requirements of the Loan Documents referred to herein and this opinion may not
be relied upon by any person, firm or entity whatsoever other than the entity
addressed and its legal counsel without our prior written consent.
This opinion is rendered as of the date hereof, and we undertake no,
and hereby disclaim any, obligation to advise you of
<PAGE> 111
AT&T Credit Corporation
December 30, 1993
Page 6
any changes in or developments that might affect any matters or opinions set
forth herein.
Sincerely,
BRUNINI, GRANTHAM, GROWER & HEWES
/s/ JAMES T. THOMAS, IV
James T. Thomas, IV
JTT,IV:tsw/cmm
<PAGE> 112
EXHIBIT I-3
FORM OF OPINION OF BORROWER'S SPECIAL COUNSEL
AT&T Credit Corporation
2 Gatehall Drive
Parsippany, New Jersey 07054
Re: Loans to Mississippi-34 Cellular Corporation
Ladies and Gentlemen:
We have acted as special regulatory counsel for Mississippi-34 Cellular
Corporation, a Mississippi corporation ("Borrower"), in connection with the
execution and delivery of the following documents of even date herewith: (i)
that certain Loan and Security Agreement ("Loan Agreement") between Borrower
and AT&T Credit Corporation ("Lender"), (ii) that certain Equipment Note
executed by the Borrower and payable to Lender in the original principal amount
of $______________, (iii) that certain Capital Note executed by the Borrower and
payable to Lender in the original principal amount of $___________, and (iv)
the other documents, instruments and agreements, including without limitation,
UCC financing statements, executed in connection with the transactions
contemplated by the foregoing.
This opinion is being delivered to you pursuant to Section
4.01(e) of the Loan Agreement. Capitalized terms not otherwise defined herein
shall have the meanings given to such terms in the Loan Agreement.
In connection with this opinion we have examined originals or
copies, certified or otherwise identified to our satisfaction, of the documents
and instruments listed in items (i) through (v) above (such documents being
hereinafter referred to, collectively, as the "Loan Documents").
We have assumed (i) the genuineness of all signatures, the
authenticity of documents submitted to us as originals, the authority of
persons signing all documents in connection with which this opinion is
rendered, and, the conforming to authentic original documents of all documents
submitted to us as certified, conformed, or photostatic copies; (ii) the
correctness of public files, records and certificates of, or furnished by,
governmental or regulatory agencies or authorities; and (iii) the power and
authority of the Borrower and the Lender to enter into and perform their
respective obligations under the Loan Documents.
-95-
<PAGE> 113
This opinion is based upon an examination of the rules,
regulations, documents, certificates, public files and records of the Federal
Communications Commission (the "FCC") and the Loan Documents. In rendering the
opinions herein, we have considered duly the Communications Act of 1934, as
amended, and the rules and regulations promulgated thereunder (collectively,
the "Act") as they relate to the regulation of the Borrower as a provider of
telecommunication and telephone services.
Based on the foregoing and subject to the limitations set forth
herein, we are of the opinion that:
1. No consent, approval or other action by the FCC which has not
been obtained or taken, is required for the execution, delivery or performance
of any of the Loan Documents, except for the possible future actions
contemplated in the Loan Documents affecting ownership of the Borrower or
control of the Operating Licenses.
2. To the best of our knowledge and belief following diligent
inquiry, Borrower has obtained all FCC licenses and permits necessary for the
construction and operation of the System, and has otherwise complied with all
applicable FCC rules and regulations.
3. Neither the transactions contemplated by the Loan Documents
nor the execution and delivery of the Loan Documents by the Borrower are in
violation or contravention of any FCC rules or regulations presently in effect
having applicability to the Borrower.
The information set forth herein is as of the date hereof. We
assume no obligation to advise you of changes which may thereafter be brought
to our attention. Our opinions are based on statutory laws, judicial decisions
and published administrative rules, regulations and advisory opinions that are
effective on the date hereof, and we do not opine with respect to any law,
regulation, rule or governmental policy which may be enacted or adopted after
the date hereof, nor assume any responsibility to advise you of future changes
in our opinions.
This opinion is furnished by us, as counsel for Borrower, to you,
your successors and assigns, and any subsequent holder of any promissory notes
for your benefit and their benefit and solely in connection with the subject
transactions, upon the understanding that we are not hereby assuming
professional responsibility to any other person whatsoever. This opinion may
not be relied on by nor copies delivered to any other person without our prior
written consent.
Very truly yours,
-96-
<PAGE> 114
EXHIBIT J
FORM OF
ENDORSEMENT
LENDER'S LOSS PAYABLE CLAUSE
Attached to and forming part of Policy No._____________ of the
[Name of Insurance Co.] ("Company") issued at its _______________ Agency to
Mississippi-34 Cellular Corporation ("Insured"). Dated ___________.
Loss, if any, under this policy shall be payable to AT&T Credit
Corporation ("Lender") whose address is 2 Gatehall Drive, Parsippany, New
Jersey 07054, as lender, mortgagee, or trustee, as its interest may appear.
It is understood that Lender now has or will acquire from time to
time an insurable interest in certain property insured under this policy as
established by warehouse receipts, bills of lading, documentary of other
written evidence.
This insurance, solely as to the interest therein of Lender,
shall not be impaired or invalidated by any act or neglect of the Insured,
mortgagor or owner of the within described property, nor by any change in the
title or ownership of the property, nor by the occupation of the premises
wherein such property is located for purposes more hazardous than are permitted
by this policy; provided that in case the Insured, mortgagor or owner shall
neglect to pay any premium under this policy, Lender shall, on demand, pay the
same.
Provided, also that Lender shall notify this Company of any
change of ownership or occupancy or increase of hazard which shall come to the
knowledge of Lender and, unless permitted by this policy, it shall be noted
thereon and Lender shall, on demand, pay the premium for such increased hazard
for the term of the use thereof; otherwise, this policy shall be null and void.
This Company reserves the right to cancel this policy at any time
as provided by its terms, but in such case this policy shall continue in force
for the benefit only of Lender for thirty (30) days after written notice of
such cancellation to lender at the address set forth above and shall then
cease, and this Company shall have the right, on like notice, to cancel this
agreement.
Whenever this Company shall pay Lender any sum for loss or damage
under this policy and shall claim that, as to the Insured, mortgagor or owner
no liability thereof existed, this
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<PAGE> 115
Company shall, to the extent of such payment, be thereupon legally subrogated
to all the rights of the party to whom such payment shall be made, under all
securities held as collateral for the debt, or may, at its option, pay Lender
the whole principal due or to grow due on the debt with interest, and shall
thereupon receive a full assignment and transfer of the debt and of the
mortgage and of all such other securities as evidence the interest of Lender in
the within described property; but no subrogation shall impair the right of
Lender to recover the full amount of its claim against the Insured, mortgagor
or owner.
All other terms and conditions of the policy to which this
Endorsement is attached and of which it is a part, remain unchanged, which
other terms and conditions include the limit(s) of liability named in the
policy and the conditions of any Value Reporting, Full Reporting, Total
Insurance, Coinsurance, Reduced Rate Contribution or Average Clauses
incorporated therein or attached thereto.
It is hereby understood and agreed that (i) the policy to which
this Endorsement is attached will not be changed in any way which may affect
Lender's rights under this policy without prior written notice to Lender at the
address set forth above and (ii) that the Company will provide Lender with
written notice at such address of any expiration of this policy or any failure
by the Insured to renew this policy at the relevant intervals under the terms
of the policy within five (5) business days of such expiration or failure to
renew.
----------------------------
Agent
-98-
<PAGE> 116
EXHIBIT K
FORM OF
RESTRICTED ACCOUNT AGREEMENT
TO: AT&T Credit Corporation, as lender (the "Lender"), under that certain
Loan and Security Agreement, dated as of December 20, 1993 (the "Loan
Agreement"), between the Lender and Mississippi-34 Cellular Corporation,
a Mississippi corporation (the "Borrower").
RE: Account Nos. ____________ of the Borrower maintained with Deposit
Guaranty National Bank (the "Bank").
This will confirm that the Borrower and the Bank have agreed as
follows with respect to the above referenced accounts (such accounts and all
other bank accounts now or hereafter maintained at the Bank by, or for the
deposit, credit or custody of property of the Borrower are herein collectively
called the "Accounts" and individually called an "Account"):
1. The Borrower and the Bank acknowledge and confirm that all
funds, items, instruments, investments, securities and other things of
value at any time paid, deposited, credited or held (whether for
collection, provisionally or otherwise) now or at any time hereafter in
the Accounts and all of the Borrower's rights regarding the Accounts
constitute part of the collateral in which the Borrower has granted a
security interest to the Lender, to secure the Borrower's obligations
under the Loan Agreement and the other "Loan Documents" (as defined in
the Loan Agreement), and that the Lender holds a security interest
therein.
2. The Bank shall not assert, claim or endeavor to exercise any
existing and future rights of setoff and banker's liens against the
Accounts and all items and proceeds thereof that come into the Bank's
possession in connection with the Accounts, provided however that the
Bank shall retain its right to charge the Accounts (a) subject to
Paragraph 4 below, for all items deposited in and credited to the
Accounts after the date hereof which are subsequently returned to the
Bank, and (b) for any and all compensation and expenses and other sums
owing by Borrower to the Bank with respect to the Accounts or the
provision of balance reporting and other similar services related to the
Accounts.
3. The Bank will take the following actions upon written notice
("Notice") by the Lender that an "Event of Default" (as defined in the
Loan Agreement) exists:
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<PAGE> 117
A. Until the Bank shall have received a "Clearance" (as
defined below), the Bank will (and, in the event of such a Notice,
the Borrower hereby irrevocably authorizes and instructs the Bank
to) cease honoring all drafts, demands, withdrawal requests or
remittance instructions by the Borrower, whether made before or
after the Notice.
B. Until the Bank shall have received a clearance, the Bank
will hold solely for the account of the Lender all funds which may
be on deposit in the Accounts at the time of the Notice and all
funds thereafter deposited to such Accounts, and the Bank will
remit all such funds (subject to Paragraph 2 above) directly to
the Lender, as soon as the funds are collected, by electronic
transfers to such account at such address as the Lender shall in
the Notice indicate, or in such other manner as the Lender may
from time to time thereafter instruct the Bank in writing. After
such a Notice is made, and until a Clearance is received by the
Bank, the Lender shall have sole control over the Accounts and the
sole right to exercise and enforce all rights and remedies with
respect thereto. For the purposes of this Agreement, a "Clearance"
shall be a written notice from the Lender to the Bank that an
Event of Default no longer exists. Each Notice and Clearance shall
be effective when it is received by the Bank in writing at the
address and to the attention of the person as set forth below (or
at such other address or to the attention of such other person as
the Bank may specify by written notice received by the Lender and
the Borrower) and when the Bank has had a reasonable time, based
on the same standards as those applicable to payment and stop
payment instructions generally, to act thereon.
4. Checks returned unpaid because of uncollected or insufficient
funds shall be handled in accordance with the Bank's customary policies
and procedures. The Bank shall be entitled to charge the amount of any
check returned unpaid because of uncollected or insufficient funds
against the Account. The Bank will notify the Lender and the Borrower of
all items deposited which are returned a second time for any reason. If
there are insufficient funds in the Account to cover said checks, the
Bank shall make demand directly upon the Borrower for reimbursement. If,
at any time after the Bank has received a Notice and prior to any time
the Bank has received a Clearance with respect to such Notice, (i) the
Borrower fails to reimburse the Bank for the amount of any such returned
check within three (3) days of the Bank's demand therefor and (ii) the
Bank has remitted the funds in the Account to the Lender in accordance
with the provisions of Paragraph 3B above, then the Bank shall make
demand on the Lender for reimbursement for the amount of any
-100-
<PAGE> 118
such returned check, and the Lender agrees to reimburse the Bank for the
amount of such check upon demand, provided that funds representing the
amount of such returned check were included in the Bank's remittance to
the Lender. The provisions of this Paragraph shall survive the
termination of this Agreement.
5. The Bank will send to the Lender, at the address set forth
below, on a semi-annual basis, copies of the periodic statements for the
Accounts during the preceding six month period.
6. This Agreement is binding upon the Bank and the Borrower and
their respective successors and assigns and is enforceable by the Lender
and its successors and assigns. It supersedes all prior agreements
relating to the Accounts, and it may not be modified or terminated
except with the Lender's written consent. The Bank and the Borrower
waive notice of acceptance hereof and of any action taken or omitted in
reliance hereon.
7. This Agreement may be executed in any number of counterparts
and by the parties hereto on separate counterparts, and each such
counterpart shall be deemed an original, but all such counterparts when
taken together shall constitute but one and the same agreement.
DATED: , 1993
----------------------------
MISSISSIPPI-34 CELLULAR
CORPORATION
One Lakeshore Drive, Suite 1495
Lake Charles, LA 70629
Attn:
----------------------------
Telecopier No.:
Telephone No.:
By:
----------------------------------
Name:
-----------------------------
Title:
----------------------------
-101-
<PAGE> 119
DEPOSIT GUARANTY NATIONAL BANK
Post Office Box 11200
Jackson, MS 39201
Attn: Paul Howell,
Account officer
Telecopier No:
Telephone No.:
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
AT&T CREDIT CORPORATION
c/o AT&T Capital Corporation
Capital Markets Division
44 Whippany Road
Morristown, NJ 07962-1983
Attn: Operations Manager
Telecopier No: (201) 397-4368
Telephone No.: (201) 397-3429
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
-102-
<PAGE> 120
EXHIBIT L
FORM OF LANDLORD WAIVER
To: AT&T Credit Corporation
2 Gatehall Drive
Parsippany, New Jersey 07054
Mississippi-34 Cellular corporation, a Mississippi corporation
("Borrower"), is the lessee under that certain ______________________ dated
__________________ (the "Lease") between Borrower and the undersigned covering a
_______________ Parcel located in ________________, (the "Premises") more fully
described in the Lease which is attached hereto as Exhibit A ("Lease"). The
undersigned is the sole owner of the Premises. Borrower has certain of its
assets located on the Premises.
Borrower has entered into certain financing arrangements with
AT&T Credit Corporation ("Lender") and, as a condition to Lender's loans to
Borrower, Lender requires, among other things, liens on all of Borrower's
property located on the Premises ("Collateral").
To induce Lender (together with its agents and assigns to
enter into said financing arrangements, and for other good and valuable
consideration, the undersigned hereby agrees that:
(i) it will not assert against any of Borrower's assets
any statutory or possessory liens, including, without limitation,
rights of levy or distraint for rent, all of which it hereby
waives;
(ii) none of the Collateral located on the Premises shall
be deemed to be fixtures;
(iii) it will notify Lender if Borrower defaults on its
lease obligations to the undersigned and allow Lender fifteen
(15) days from its receipt of notice in which to cure or cause
Borrower to cure any such defaults;
(iv) if, for any reason whatsoever, the undersigned either
deems itself entitled to redeem or to take possession of the
Premises during the term of Borrower's lease or intends to sell
or otherwise transfer all or any part of its interest in the
Premises, the undersigned will notify Lender fifteen (15) days
before taking such action;
-103-
<PAGE> 121
(v) if Borrower defaults on its obligations to Lender and,
as a result, Lender undertakes to enforce its security interest
in the Collateral, the undersigned will cooperate with Lender in
its efforts to assemble all of the Collateral located on the
Premises, will permit Lender to remain on the Premises for
forty-five (45) days after Lender declares the default, provided
Lender pays the rental payments due under the Lease for the
period of time Lender uses the Premises, or, at Lender's option,
to remove the Collateral from the Premises within a reasonable
time, not to exceed forty-five (45) days after Lender declares
the default, provided Lender pays the rental payments due under
the Lease for the period of time Lender uses the Premises, and
will not hinder Lender's actions in enforcing its liens on the
Collateral.
Any notice(s) required or desired to be given hereunder
shall be directed to the party to be notified at the address stated
herein.
The agreements contained herein shall continue in force
until all of Borrower's obligations and liabilities to Lender are paid
and satisfied in full and all financing arrangements between Lender and
Borrower have been terminated.
The undersigned will notify all successor owners,
transferees, purchasers and mortgagees of the existence of this waiver.
The agreements contained herein may not be modified or terminated orally
and shall be binding upon the successors, assigns and personal
representatives of the undersigned, upon any successor owner or
transferee of the Premises, and upon any purchasers, including any
mortgagee, from the undersigned.
Executed and delivered this _________ day of __________,
1993, at ___________________________.
Witness: -------------------------------------
By:
-------- ----------------------------------
Its:
--------------------------------
Address:
----------------------------
-------------------------------------
-------------------------------------
[Add acknowledgment if to be recorded)
-104-
<PAGE> 122
EXHIBIT M
FORM OF REAL PROPERTY LETTER
December __, 1993
AT&T Credit Corporation
2 Gatehall Drive
Parsippany, New Jersey 07054
Re: Future Property Acquisitions
Ladies and Gentlemen:
Reference is made to that certain Loan and Security Agreement
between us of even date herewith. Our plans for leasing additional real estate
sites are as follows:
Calhoun City May, 1994
Armory June, 1994
Aberdeen June, 1994
Houston June, 1994
There are no plans for purchasing additional real estate sites.
Very truly yours,
MISSISSIPPI-34 CELLULAR
CORPORATION
By:
--------------------------------
Its:
-------------------------------
-105-
<PAGE> 123
EXHIBIT N
FORM OF MONTHLY REPORT
<TABLE>
<CAPTION>
Month Month Month Month Month Month
1 2 3 4 5 6
<S> <C> <C> <C> <C> <C> <C>
Customers
Beginning of Period 0 0 0 0 0 0
Gross Additions 0 0 0 0 0 0
Less: Disconnects 0 0 0 0 0 0
----- ----- ----- ----- ----- -----
End of Period 0 0 0 0 0 0
Revenue
Service Activation (one time) 0 0 0 0 0 0
Monthly Service & Airtime 0 0 0 0 0 0
Other 0 0 0 0 0 0
----- ----- ----- ----- ----- -----
Total Local Revenue 0 0 0 0 0 0
Roamers - Foreign Systems 0 0 0 0 0 0
Equipment Sales & Installation 0 0 0 0 0 0
Rental Phones 0 0 0 0 0 0
----- ----- ----- ----- ----- -----
Total Gross Revenue 0 0 0 0 0 0
Expenses
Plant Operations 0 0 0 0 0 0
General & Administrative 0 0 0 0 0 0
Sales & Marketing 0 0 0 0 0 0
Total Sales & Marketing 0 0 0 0 0 0
Management Fees 0 0 0 0 0 0
Other 0 0 0 0 0 0
----- ----- ----- ----- ----- -----
Total Expenses 0 0 0 0 0 0
Changes in Working Capital 0 0 0 0 0 0
Cash Flow from Operations 0 0 0 0 0 0
Capital Expenditures
MTSO Equipment 0 0 0 0 0 0
Cell Site Equipment 0 0 0 0 0 0
Install, O.E.M., & Eng. 0 0 0 0 0 0
Other Fixed Assets 0 0 0 0 0 0
</TABLE>
-106-
<PAGE> 124
EXHIBIT 0
FORM OF QUARTERLY REPORT
<TABLE>
<CAPTION>
Quarter Quarter Quarter Quarter
1 2 3 4
<S> <C> <C> <C> <C>
CUSTOMER STATISTICS
Total RSA Subscriber Estimate 0 0 0 0
Assumed Market Share (quarter end) 0% 0% 0% 0%
Customers
Beginning of Period 0 0 0 0
Gross Additions 0 0 0 0
Less Disconnects 0 0 0 0
--------- -------- -------- ---------
End of Period 0 0 0 0
Subscriber Usage
Average Local Airtime 0 0 0 0
Peak Airtime 0.0% 0.0% 0.0% 0.0%
Offpeak Airtime 0.0% 0.0% 0.0% 0.0%
Voice Mail & Paging 0.0% 0.0% 0.0% 0.0%
Other (CFW/CWT/3PC/RmAm) 0.0% 0.0% 0.0% 0.0%
Non-Subscriber Usage
Roaming Airtime 0 0 0 0
Basic System Charges
Service Activation (one time) $0 $0 $0 $0
Monthly Service Charge $0.00 $0.00 $0.00 $0.00
Voice Mail Box & Paging $0.00 $0.00 $0.00 $0.00
Other (CFW/CWT/3PC/RmAm) $0.00 $0.00 $0.00 $0.00
Airtime Charges
Peak Airtime Rate $0.00 $0.00 $0.00 $0.00
Offpeak Airtime Rate $0.00 $0.00 $0.00 $0.00
Weighted Average per minute $0.00 $0.00 $0.00 $0.00
Roamer Rate (out-collect) $0.00 $0.00 $0.00 $0.00
Other Service Rates $0.00 $0.00 $0.00 $0.00
Cellular Telephone Sales
Total Units Sold 0 0 0 0
New Customer % Buying Phones 0.0% 0.0% 0.0% 0.0%
Average Selling Price $0 $0 $0 $0
Average Cost of Unit $0 $0 $0 $0
New Customer % Installing Phones 0.0% 0.0% 0.0% 0.0%
Average Installation Price $0 $0 $0 $0
Average Cost of Installation $0 $0 $0 $0
</TABLE>
-107-
<PAGE> 125
<TABLE>
<S> <C> <C> <C> <C>
Cellular Telephone Rentals
Phones Rented per Month 0 0 0 0
Monthly Rental Charge $0.00 $0.00 $0.00 $0.00
REVENUE STATISTICS
Revenue/Customer/Month $0 $0 $0 $0
Average Cellular Bill - Local $0 $0 $0 $0
Average Cellular Bill - Keeper $0 $0 $0 $0
COST STATISTICS
Cost to Add Gross Customer
Plant Operations $0 $0 $0 $0
General Administrative $0 $0 $0 $0
Sales & Marketing $0 $0 $0 $0
--------- -------- -------- ---------
Total Cost to Add a Customer $0 $0 $0 $0
CAPITAL EXPENDITURES
Cell Sites 0 0 0 0
Electronics 0 0 0 0
Tower 0 0 0 0
Buildings/land 0 0 0 0
Other 0 0 0 0
MTSO 0 0 0 0
ECP 0 0 0 0
IMS 0 0 0 0
DCS 0 0 0 0
Other 0 0 0 0
T-1 Lines 0 0 0 0
Microwave Equip 0 0 0 0
Other 0 0 0 0
--------- -------- -------- ---------
Total 0 0 0 0
</TABLE>
-108-
<PAGE> 126
SCHEDULE 1.01
TO
LOAN AGREEMENT DATED DECEMBER 20, 1993
MORTGAGES
1. Deed of Trust, Security Agreement, Financing Statement and Assignment
of Rents and Leases for Borrower's property located in Holmes County,
Mississippi.
-109-
<PAGE> 127
SCHEDULE 3.02
TO
LOAN AGREEMENT DATED DECEMBER 20, 1993
GOVERNMENTAL CONSENTS
None.
-110-
<PAGE> 128
SCHEDULE 3.05
TO
LOAN AGREEMENT DATED DECEMBER 20, 1993
PENDING LITIGATION
None.
-111-
<PAGE> 129
SCHEDULE 3.10
TO
LOAN AGREEMENT DATED DECEMBER 20, 1993
COMPLIANCE WITH LAWS
None.
-112-
<PAGE> 130
SCHEDULE 3.11
TO
LOAN AGREEMENT DATED DECEMBER 20, 1993
ERISA
None.
-113-
<PAGE> 131
SCHEDULE 3.14
TO
LOAN AGREEMENT DATED DECEMBER 20, 1993
FINANCING STATEMENTS FILED AGAINST THE BORROWER
Secretary of State Bolivar County Chancery Clerk
of Mississippi Post Office Box 789
Post Office Box 136 Cleveland, MS 38732
Jackson, MS 39205-0136
Chickasaw County Chancery Clerk
Calhoun County Chancery Clerk Highway 8 and 15
Post Office Box 8 Houston, MS 38551
Pittsboro, MS 38951
Holmes County Chancery Clerk
Grenada County Chancery Clerk Post Office Box 578
Courthouse Lexington, MS 39095
Courthouse Square
Grenada, MS 38901 Monroe County Chancery Clerk
Post Office Box 578
Leflore County Chancery Clerk Aberdeen, MS 39730
Post Office Box 1468
Greenwood, MS 38930 Yalobusha County Chancery Clerk
Post Office Box 260
Sunflower County Chancery Clerk Coffeeville, MS 38922
Post Office Box 988
Indianola, MS 38751
Calcasieu Parish,
Louisiana
-114-
<PAGE> 132
SCHEDULE 3.17
TO
LOAN AGREEMENT DATED DECEMBER 20, 1993
INSURANCE
See Attached Certificate of Insurance
-115-
<PAGE> 133
================================================================================
ISSUE DATE(MM/DD/YY)
[ACCORD LOGO] [CERTIFICATE OF INSURANCE] 12/20/93
================================================================================
PRODUCER THIS CERTIFICATE IS ISSUED AS A MATTER OF
INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE
Ross & Yerger CERTIFICATE HOLDER. THIS CERTIFICATE DOES NOT
P. O. Box 1139 AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY
1600 Capital Towers THE POLICIES BELOW.
Jackson, MS 39215 ----------------------------------------------------
COMPANIES AFFORDING COVERAGE
----------------------------------------------------
COMPANY A INSURANCE COMPANY OF NORTH AMERICA
LETTER
----------------------------------------------------
COMPANY B
- --------------------------- LETTER
INSURED ----------------------------------------------------
COMPANY C
Mississippi - 34 Cellular LETTER
Corporation ----------------------------------------------------
c/o Mercury, Inc. COMPANY D
P.O. Box 3709 LETTER
Lake Charles, LA 70602 ----------------------------------------------------
COMPANY E
LETTER
================================================================================
THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED
TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED. NOTWITHSTANDING ANY
REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO
WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN. THE INSURANCE AFFORDED BY
THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND
CONDITIONS OF SUCH POLICIES. LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
POLICY EFFECTIVE POLICY EXPIRATION LIMITS
TYPE OF INSURANCE POLICY NUMBER DATE(MM/DD/YY) DATE(MM/DD/YY)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
GENERAL LIABILITY GPPD2815012A 09/14/93 09/14/94 GENERAL AGGREGATE $1,000,000
------------------------------------
/X/ COMMERCIAL GENERAL LIABILITY PRODUCTS - COMP/OP AGG. $1,000,000
------------------------------------
/ / CLAIMS MADE /X/ OCCUR. PERSONAL & ADV. INJURY $1,000,000
------------------------------------
/ / OWNER'S & CONTRACTOR'S PROT. EACH OCCURRENCE $1,000,000
------------------------------------
FIRE DAMAGE (Any one fire) $50,000
------------------------------------
MED. EXPENSE (Any one person) $5,000
====================================================================================================================================
AUTOMOBILE LIABILITY GPPD2815012A 09/14/93 09/14/94 COMBINED SINGLE LIMIT $1,000,000
------------------------------------
/ / ANY AUTO BODILY INJURY
/ / ALL OWNED AUTOS (Per Person) $
/ / SCHEDULED AUTOS ------------------------------------
/ / HIRED AUTOS BODILY INJURY
/X/ NON-OWNED AUTOS (Per accident) $
/ / GARAGE LIABILITY ------------------------------------
PROPERTY DAMAGE $
- ------------------------------------------------------------------------------------------------------------------------------------
EXCESS LIABILITY XCPG16636290 09/14/93 09/14/94 EACH OCCURRENCE $4,000,000
------------------------------------
/X/ UMBRELLA FORM AGGREGATE $4,000,000
/ / OTHER THAN UMBRELLA FORM ------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
WORKER'S COMPENSATION STATUTORY LIMITS
AND ------------------------------------
EMPLOYERS' LIABILITY EACH ACCIDENT $
------------------------------------
DISEASE-POLICY LIMIT $
------------------------------------
DISEASE-EACH EMPLOYEE $
- ------------------------------------------------------------------------------------------------------------------------------------
OTHER Property GPPD2815012A 09/14/93 09/14/94 Greenwood Switch
Replacement Cost Limit, each site $1,634,922
Business Income $253,722 $250 Deductible
15 Days Deduct. $200,000 Limit
- ------------------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF OPERATIONS/LOCATIONS/VEHICLES/SPECIAL ITEMS
Certificate holder is loss payee and additional insured in regard to
(See Attached Schedule.)
====================================================================================================================================
CERTIFICATE HOLDER CANCELLATION
====================================================================================================================================
AT&T Credit Corp. SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE
c/o AT&T Capital Corp./Capital EXPIRATION DATE THEREOF, THE ISSUING COMPANY WILL ENDEAVOR TO MAIL
Attn: Andreas Skibiel 30 DAYS WRITTEN NOTICE TO THE CERTIFICATE HOLDER NAMED TO THE LEFT,
Markets Division BUT FAILURE TO MAIL SUCH NOTICE SHALL IMPOSE NO OBLIGATION OR
Whittany Road LIABILITY OF ANY KIND UPON THE COMPANY, ITS AGENTS OR REPRESENTATIVES.
Morristown, NJ 07962-1983 ----------------------------------------------------------------------
AUTHORIZED REPRESENTATIVE
/s/ ILLEGIBLE
====================================================================================================================================
</TABLE>
<PAGE> 134
================================================================================
DESCRIPTIONS (CONTINUED FROM PAGE 1)
================================================================================
leased equipment with waiver of subrogation attached
**Cancellation clause is amended to read: Should any of the above described
policies be cancelled before the expiration date thereof, the issuing company
will mail 30 days written notice to the certificate holder.
================================================================================
<PAGE> 135
<TABLE>
<S> <C> <C>
- --------------------------------------- -------------------------------------- -----------------------------
Client Name and Address Company Agency Name and Address
Mississippi - 34 Cellular Insurance Company of Nort Ross & Yerger
Corporation -------------------------------------- P. O. Box 1139
c/o Mercury, Inc. Policy Number 1600 Capital Towers
P. O. Box 3709 GPPD2815012A Jackson, MS 39215
Lake Charles, LA 70602 -------------------------------------- -----------------------------
- --------------------------------------- Effective Date Expiration Date
--------------------------------------
09/14/93 09/14/94
--------------------------------------
</TABLE>
<TABLE>
<CAPTION>
======================================================================================================================
Sch# Item # Schedule / Item Description Value Date Off
======================================================================================================================
<S> <C> <C> <C> <C>
1 Cellular Telephone System Supplement - Total Limits
1 200 Tower Road, Grenada, MS 253,722
2 613 (505) Tallahatchie Street, Greenwood, MS 253,722
3 1321 DD Sunset Plaza, Grenada, MS 253,722
4 1321 AA Sunset Plaza, Grenada, MS 253,722
5 Greenwood, MS 253,722
6 Indianola, MS 253,722
7 Cleveland, MS 253,722
8 Durant, MS NO VALUE YET 0
9 Oakland, MS 253,722
10 Switch Location, Greenwood, MS 1,634,922
Total value: 3,664,698
======================================================================================================================
</TABLE>
<PAGE> 136
SCHEDULE 3.20
TO
LOAN AGREEMENT DATED DECEMBER 20, 1993
REAL PROPERTY, LEASES AND EASEMENTS
OWNED REAL PROPERTY
One Parcel in Holmes County, Mississippi
LEASED REAL PROPERTY
1. Bolivar County, Mississippi
2. Grenada County, Mississippi (Radio Tower and Office Site)
3. Leflore County, Mississippi
4. Sunflower County, Mississippi
5. Yalobusha County, Mississippi
<PAGE> 137
SCHEDULE 7.04
TO
LOAN AGREEMENT DATED DECEMBER 20, 1993
COLLECTION ACCOUNTS
Sunburst Bank Grenada
Attention: Jean Miller
Assistant Vice-President
Post Office Box 947
Grenada, MS 38901
Telecopier No.: (601) 227-3366
Telephone No.: (601) 22704995
ACCOUNT NUMBER: 13117361-83
Calcasieu Marine National Bank
Attention: Paul Craig
Sr. Vice-President
Post Office Box 3402
Lake Charles, LA 70602
Telecopier No.: (318) 494-3309
Telephone No.: (318) 494-3554
ACCOUNT NUMBER: 01-095366-01
-117-
<PAGE> 1
EXHIBIT 4.78
US UNWIRED
US UNWIRED INC.
NUMBER SHARES
CLASS A COMMON STOCK
INCORPORATED UNDER THE
LAWS OF THE STATE OF LOUISIANA
CUSIP 90338R 10 4
SEE REVERSE FOR CERTAIN DEFINITIONS
AND INFORMATION
THIS CERTIFIES THAT
is the registered holder of
FULLY PAID AND NONASSESSABLE SHARES OF THE CLASS A COMMON STOCK,
PAR VALUE $.01 PER SHARE OF
US UNWIRED INC.
transferable on the books of the Corporation in person or by duly authorized
attorney, upon surrender of this Certificate properly endorsed. This
certificate is not valid unless countersigned and registered by the Transfer
Agent and Registrar.
WITNESS the facsimile seal of the Corporation and the facsimile
signatures of its duly authorized Officers.
Dated:
/s/ THOMAS G. HENNING /s/ WILLIAM L. HENNING, JR.
SECRETARY CHAIRMAN AND CHIEF EXECUTIVE OFFICER
[SEAL]
COUNTERSIGNED AND REGISTERED:
FIRST CHICAGO TRUST COMPANY
OF NEW YORK
TRANSFER AGENT AND REGISTRAR
BY
AUTHORIZED SIGNATURE
<PAGE> 2
US UNWIRED INC.
US Unwired Inc. will furnish to any shareholder, upon request and without
charge, a summary of the designations, relative rights, preferences and
limitations of the shares of each class and of each series of each preferred or
special class, so far as the same have been fixed, and the authority of the
Board of Directors to establish other series and to fix the relative rights,
preferences and limitations of the shares of any class or series by amendment
of the Articles of Incorporation.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
TEN ENT - as tenants by the ------ --------
entireties (Cust) (Minor)
JT TEN - as joint tenants with under Uniform Gifts to
right of survivorship Minors
and not as tenants Act
in common ------------------
(State)
Additional abbreviations may also be used though not in the above list.
FOR VALUE RECEIVED, hereby sell, assign and transfer unto
--------
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
[ ]
----------------------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE OF ASSIGNEE)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Shares
----------------------------------------------------------------------
of the capital stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
Attorney
--------------------------------------------------------------------
to transfer the said stock on the books of the within named Corporation
with full power of substitution in the premises.
Dated
---------------------------------
Signature(s)
-------------------------------------
NOTICE: THE SIGNATURE(S) TO THIS ASSIGNMENT
MUST CORRESPOND WITH THE NAME(S) AS
WRITTEN UPON THE FACE OF THE
CERTIFICATE IN EVERY PARTICULAR
WITHOUT ALTERATION OR ENLARGEMENT
OR ANY CHANGE WHATEVER.
Signature(s) Guaranteed:
-------------------------------------
THE SIGNATURE(S) SHOULD BE
GUARANTEED BY AN ELIGIBLE GUARANTOR
INSTITUTION (BANK, STOCKBROKER,
SAVINGS AND LOAN ASSOCIATION OR
CREDIT UNION) WITH MEMBERSHIP IN AN
APPROVED SIGNATURE MEDALLION
PROGRAM, PURSUANT TO S.E.C. RULE
17Ad-15.
<PAGE> 1
EXHIBIT 4.79
A G R E E M E N T
This Agreement is dated as of December 26, 1996, among Mercury, Inc., a
Louisiana corporation (the "Company"), and the shareholders of the Company who
are signatories hereto or become parties hereto in the manner hereinafter
provided (collectively, the "Shareholders").
The Company and the Shareholders agree as follows:
1. Articles of Incorporation.
(a) Each of the Shareholders hereby approves and accepts, and
will vote his, her or its voting stock of the Company "for" the approval of,
Restated Articles of Incorporation of the Company in the form annexed as
Exhibit A (the "Restated Articles"). The Shareholders will not approve any
amendment to the Restated Articles that restricts the transfer of Class B
Common Stock of the Company beyond the restrictions contained in the Restated
Articles, and will use their best efforts to prevent (or, if they cannot
prevent, then to repeal) any amendment to the By-Laws of the Company that has
that effect, unless such amendment to the Restated Articles or By-Laws is
approved by each of the Shareholders who at the time thereof is a holder of
Class B Common Stock.
(b) If requested by the Company or any Shareholder in any
Offer Notice or Acceptance Notice given pursuant to Article IV(B) of the
Restated Articles, any Acceptance Notice or Withdrawal Notice given by the
Company or any Shareholder shall, in addition to being sent in the manner
required by the Restated Articles, also be sent to a specified fax number
and/or to a specified advisor (including by fax if a number is specified). The
requirements of this Section 1(b) shall be deemed satisfied if the person
giving the Acceptance Notice or Withdrawal Notice, as the case may be, can
demonstrate a good faith attempt to comply with such request.
2. Waiver of Restrictions.
(a) If the restrictions contained in Article IV(B)(7) of the
Restated Articles are waived for any holder of Class B Common Stock, other than
a waiver in accordance with Section 2(b) below, any Shareholder who learns of
such waiver will cause notice of such waiver to be given to all other
Shareholders. The Shareholders will vote their Class B Common Stock in favor
of granting, to any such other Shareholder who requests same within 90 days
after receiving such notice, an equivalent waiver that is subject to the same
terms and conditions, if any.
<PAGE> 2
(b) The Shareholders will vote their shares of Class B Common
Stock in favor of granting a waiver of the restrictions contained in Article
IV(B)(7) of the Restated Articles to the Estate of any deceased Shareholder, to
the extent such waiver becomes necessary for the Estate to raise funds to pay
estate and similar taxes due by the Estate. As a condition to such waiver
being granted, the Estate shall be required to agree in writing (i) to conduct
such sales in an orderly fashion so as to minimize disruption of the public
market, and (ii) to make such sale in one registered underwritten offering if:
(A) the Company agrees to file the necessary registration statement, (B) the
number of shares proposed to be sold by the Estate during any period of three
months would exceed 1% of the number of shares of Class A Common Stock at the
time outstanding (excluding from such number of outstanding shares shares
issuable upon conversion or the Class B Common Stock to be sold), (C) the
Company's investment bankers recommend a sale in that manner, and (D) the
Estate is able to find underwriters reasonably acceptable to the Estate and the
Company. The provisions of Sections 3(e) and 3(f) hereof shall apply to any
registration pursuant to this subsection.
3. Piggy-Back Registration Rights. In consideration of the
Shareholders' willingness to accept the transfer restrictions of the Restated
Articles, which will benefit the Company by promoting an orderly trading market
for its shares, the Company grants the Shareholders the following piggy-back
registration rights.
(a) If the Company proposes to register under the Securities
Act the sale, for cash through underwriters, of any shares issued by the
Company, including shares that are proposed to be sold by the Company and
shares that the Company may be obligated to register under a demand
registration covenant held by a selling shareholder (collectively, "primary
shares"), other than the Company's initial public offering and other than a
registration filed pursuant to a demand registration covenant hereafter granted
by the Company to a purchaser in connection with the Company's sale of shares
to such purchaser, unless rights of the type accorded by this Section 3 are
permitted in accordance with such demand registration covenant, the Company
will notify the Shareholders (and any other shareholder who may be entitled to
include shares in such registration) of such proposal as soon as is
practicable. Subject to the allocation and limitation provisions below, the
Company will in such notice invite the Shareholders (and any other shareholder
who may be entitled to include shares in such registration) to include in such
registration (if shares of selling shareholders are permitted to be included in
the registration form proposed to be filed by the Company or in any other
registration form that the Company would be permitted to use to register the
primary shares and the use of which would not cause any material additional
expense to the Company) such aggregate number of shares (the "Includable
Shares") as shall be equal to 80% (or, at the Company's option, more) of the
amount of shares that the underwriters determine to be the approximate maximum
number which could be included in such registration without having an adverse
effect on the offering of the primary shares. Such notice (the "Piggy-Back
Notice") shall be sent to each Shareholder at his, her or its address of
record. It shall, to the extent then known or determined, identify the
-2-
<PAGE> 3
proposed offering, name the underwriters, and indicate the proposed timing.
Such disclosure shall not prevent the Company from changing those matters at
its discretion. The underwriters may at any time reduce (even to zero) the
"Includable Shares" as may be necessary so that their inclusion does not
adversely affect the offer of the Primary Shares.
(b) Each Shareholder who desires to include shares in the
registration statement shall notify the Company, within 10 days after the
Piggy-Back Notice is sent, of the number of such shares. Such notice (the
"Inclusion Notice") shall constitute the good faith commitment of the
Shareholder to include that number (or any lesser number that occurs by reason
of the allocation and limitation provisions herein) of shares in the Company's
registration statement plus up to 15% thereof to cover any over allotment
option requested by the underwriters. The Inclusion Notice shall state that
the Shareholder desires to include the shares covered by the Inclusion Notice
in the registration for sale through the underwriters as soon as may be
practicable after the effective date of the registration statement, and that
the Shareholder will provide all information and take all actions as may be
required to permit the Company to comply with all applicable legal requirements
and to obtain acceleration of the effective date of the registration statement.
(c) If the number of shares covered by Inclusion Notices
exceeds at any time the number of Includable Shares, the number set forth in
each Inclusion Notice will be proportionately reduced so that the total, as so
reduced, equals the number of Includable Shares. The reduction applicable to
each Inclusion Notice will be that proportion of the total reduction as is
equal to the fraction whose numerator is the number of shares specified in such
Inclusion Notice and whose denominator is the total number of shares specified
in all of the Inclusion Notices. If the number of Includable Shares is
increased, or if shares sought to be included in the registration are not
included, then any addition to the Includable Shares will be allocated,
proportionately in the same manner, among the Shareholders who have timely
given Inclusion Notices. The Company may in its discretion accept untimely
Inclusion Notices but in that event will give each Shareholder who has
previously submitted an Inclusion Notice a reasonable time within which to
revise it.
(d) The Company may at any time, in its sole discretion,
determine to delay or not to file or to withdraw (prior to or following the
effective date) any registration statement to which this Section 3 applies.
(e) The Shareholders whose shares are included in the
registration statement ("Selling Shareholders") will enter into customary
underwriting agreements with the Company and the underwriters, which will
contain the customary indemnifications by each of them. Each of the Selling
Shareholders will, if requested so to do by the underwriters, deposit the
shares to be sold by such Selling Shareholder with an escrow agent.
-3-
<PAGE> 4
(f) Each Selling Shareholder shall pay the registration and
NASD filing fees applicable to the shares offered by such Selling Shareholder,
the underwriting discounts and commissions applicable to such shares, the blue
sky fees and expenses applicable thereto, the fees of such Selling
Shareholder's counsel and accountants, and such Selling Shareholder's
proportionate (based on the number of shares included by that Selling
Shareholder divided by the total number of shares included by all such Selling
Shareholders) share of all incremental additional expenses caused by the
inclusion of the shares included by Selling Shareholders. The Company shall
pay all other expenses of preparation, printing and filing the registration
statement.
(g) The Company may exclude from any such registration any
shares which the Shareholder would be permitted to sell in the public market
without any remaining restriction under the Restated Articles and which can be
sold under Rule 144 or any comparable provision.
4. Transfer Assistance. The Company will, and will request that its
transfer agent, render reasonable assistance so as to promote the efficiency of
(a) the transfer of shares sold by a Shareholder under Rule 144 or 145 under
the Securities Act, and (b) the issuance of certificates representing shares of
Class A Common Stock into which shares of Class B Common Stock of a Shareholder
have been converted in accordance with the Restated Articles.
5. Miscellaneous.
(a) This Agreement constitutes the entire agreement of the
parties with respect to its subject matter, but it does not supersede any prior
written agreements of the parties except to any extent it is inconsistent with
them. Shares registered for sale under the provisions of Section 3 shall be
relieved of any restriction on transfer that arises under, or was imposed to
implement the provisions of, Rule 144 or 145 under the Securities Act, if such
registration eliminates the legal requirement for such restriction. Otherwise,
the provisions of Section 3 shall not relieve any Shareholder of any
restriction on transfer of capital stock of the Company.
(b) This Agreement binds and inures to the benefit of the
Company and its legal successors by merger or consolidation, the respective
Shareholders, the Estates of the Shareholders who are individuals, and the
legal successors by merger or consolidation of those who are not. The rights
and obligations under this Agreement may not be assigned or transferred and are
not heritable except in any such case to a Qualified Holder (as such term is
used in the Restated Articles) who acquires shares of Class B Common Stock from
a Shareholder (including by inheritance) but in that event this Agreement will,
unless such Qualified Holder is then a party to this Agreement as a
Shareholder, apply only to the shares of Class B Common Stock so acquired and
only if such Qualified Holder, promptly upon request at any time by the
Company, agrees in writing to be bound by all provisions of this Agreement
applicable to the acquired shares.
-4-
<PAGE> 5
(c) The provisions of Section 3 shall terminate six years
after the date of this Agreement unless extended by the vote of a majority of
the shares of Class B Common Stock held by the Shareholders at the time of such
extension. The remaining provisions of this Agreement shall terminate 25
years after the date of this Agreement unless so extended. No such termination
shall terminate rights and obligations already accrued at the time of such
termination.
(d) Certificates representing shares subject to the provisions
of this Agreement shall be appropriately legended.
(e) Notices shall be given to the Company at its Louisiana
registered office, Attention: President, and to each Shareholder at the address
of record of such Shareholder.
(f) This Agreement shall be governed by the internal laws of
Louisiana. It may be executed in one or more counterparts.
IN WITNESS WHEREOF, the Company and the Shareholders whose names are
subscribed hereto have become parties to this Agreement as of the date first
above written; other shareholders of the Company may become parties by
executing and returning a counterpart signature page on or before January 13,
1997 to the Company (which will acknowledge receipt thereof and send a copy of
such acknowledgment to all Shareholders who by then have become parties).
MERCURY, INC.
By:
----------------------------------
Authorized Officer
-5-
<PAGE> 6
SHAREHOLDERS
-------------------------------------- ---------------------------------
William L. Henning, Sr. Lena B. Henning
-------------------------------------- ---------------------------------
William L. Henning, Jr. John A. Henning
-------------------------------------- ---------------------------------
Thomas G. Henning Hansen Evans Scobee
-------------------------------------- ---------------------------------
Renee Scobee Marie Scobee Williams
-------------------------------------- ---------------------------------
Henry Rice Scobee Robert Piper
-------------------------------------- ---------------------------------
Thomas G. Henning, as trustee Thomas G. Henning, as trustee
of the William L. Henning, Jr. of the John A. Henning
Exempt Class Trust No. I, U/A Exempt Class Trust No. I,U/A
9-20-96 9-20-96
-------------------------------------- ---------------------------------
Thomas G. Henning, as trustee
of the Thomas G. Henning
Exempt Class Trust No. I, U/A
9-20-96
-6-
<PAGE> 1
EXHIBIT 5.1
________________, 1997
The Robinson-Humphrey Company, Inc.
A.G. Edwards & Sons, Inc.
As Representatives of the Several Underwriters
named in Schedule I to the Underwriting Agreement
c/o The Robinson-Humphrey Company, Inc.
Atlanta Financial Center
3333 Peachtree Road, NE
Atlanta, Georgia 30326
Gentlemen:
We have acted as special counsel to US Unwired Inc., a Louisiana
corporation (the "Company"), in connection with the preparation of a
registration statement on Form S-1 under the Securities Act of 1933, as amended
(the "Act"), filed by the Company with the Securities and Exchange Commission
(the "Commission") with respect to (i) the sale of 1,700,000 shares (the "Firm
Shares") of the Company's Common Stock, $.01 par value per share, pursuant to
an underwriting agreement dated __________, 1997 (the "Underwriting Agreement")
between the Company, The Robinson-Humphrey Company, Inc. and A.G. Edwards &
Sons, Inc., as representative of the several underwriters named in Schedule I
thereto (the "Underwriters") and (ii) the option granted by the Company to the
Underwriters pursuant to the Underwriting Agreement to purchase up to 255,000
additional shares of Common Stock (the "Additional Shares"). This opinion is
rendered with respect to the closing today of the purchase of the Firm Shares
by the Underwriters.
In connection with rendering the opinions expressed below, we have
examined and relied upon the registration statement on Form S-1 (Registration
No. 33-15783) filed by the Company with the Commission on November 6, 1996, as
amended by Amendments Nos. 1 and 2 thereto filed by the Company with the
Commission on December 20, 1996 and January 17, 1997, respectively (including
information contained in the form of final prospectus filed with the Commission
pursuant to Rule 424(b)(1) under the Act and deemed by virtue of Rule 430A
under
<PAGE> 2
The Robinson-Humphrey Company, Inc.
A.G. Edwards & Sons, Inc.
February __, 1997
Page 3
the Act to be part of the registration statement at the time it was declared
effective, being hereinafter referred to as the "registration Statement"), the
final prospectus in the form filed with the Commission pursuant to Rule
424(b)(1) under the Act (the "Prospectus"), the Underwriting Agreement, and the
corporate records of the Company including without limitation its Amended and
Restated Articles of Incorporation and By-laws, its stock records and records
of the proceedings of its shareholders and its Board of Directors and
committees thereof. We have also relied upon factual representations made by
the Company in the Underwriting Agreement and upon such other documents,
records, certificates and other instruments, including certificates of public
officials and officers of the Company, copies of which have been furnished to
you.
In our examination of such documents, we have assumed: (i) that the
Underwriting Agreement has been duly authorized, executed and delivered by the
parties thereto other than the Company; (ii) the authenticity of all documents
submitted to us as originals; (iii) the conformity to original documents of all
documents submitted to us as conformed, certified or photostatic copies; (iv)
the accuracy and completeness of all corporate records made available to us by
the Company; and (v) the genuineness of all signatures and documents examined
by us, all of which are assumptions that we have not independently verified.
The opinions rendered herein are specifically limited to Louisiana and
United States law.
Based upon the foregoing, we are of the opinion that:
1. The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Louisiana, has all requisite
corporate power and authority to own or hold, under lease or otherwise, its
properties and conduct its business as described in the Prospectus, and is duly
qualified as a foreign corporation for the transaction of business and is in
good standing in each jurisdiction in which the character of the property owned
or leased by it makes such qualification necessary and where the failure to
qualify or be in good standing would have a material adverse effect on the
business, operations, condition (financial or other) or properties of the
Company.
2. The Company has the requisite corporate power to enter into the
Underwriting Agreement and all contracts described in the Prospectus and
included as exhibits to the Registration Statement, as well as to issue, sell
and deliver the Firm Shares to be issued and sold by it and to consummate the
transactions contemplated thereby; the Underwriting Agreement and the
performance of the Company's obligations thereunder have been duly authorized
by the
<PAGE> 3
The Robinson-Humphrey Company, Inc.
A.G. Edwards & Sons, Inc.
February __, 1997
Page 3
Company and the Underwriting Agreement has been duly executed and delivered by
the Company and, assuming due execution and delivery by the other parties to
the Underwriting Agreement, is a valid and binding agreement of the Company
enforceable against the Company in accordance with its terms, except to the
extent that: (i) enforcement of the Underwriting Agreement may be limited by an
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or similar laws affecting creditors' rights and remedies generally,
(ii) the availability of equitable remedies may be limited by principles of
equity, and (iii) rights to indemnification and contribution thereunder may be
limited by applicable laws and the policies embodied therein.
3. Except for permits and similar authorizations required under the
securities or Blue Sky laws of certain jurisdictions (upon which we express no
opinion) and except such as have been obtained under the Act, and except as may
be required by the NASD, to our knowledge after due inquiry, no consent,
approval, authorization, registration, permit or order of any court, regulatory
body, administrative agency or other governmental body is required for the
valid execution, delivery and performance of the Underwriting Agreement and the
transactions contemplated thereby and the valid issuance and sale of the Firm
Shares by the Company as contemplated by the Underwriting Agreement.
4. The authorized, issued and outstanding capital stock of the
Company at September 30, 1996 was as set forth under the caption
"Capitalization" in the Prospectus, and the outstanding shares of Common Stock
of the Company have been validly authorized and issued, are fully paid and
nonassessable, and are free of preemptive rights.
5. The shares of capital stock of the Company (including the Firm
Shares) conform in all material respects with the statements in the Prospectus
concerning them under the caption "Description of Capital Stock" and, to our
knowledge after due inquiry, there are no outstanding options, warrants,
convertible securities or other rights to acquire from the Company any capital
stock, except as described in the Registration Statement.
6. The unissued Firm Shares to be sold by the Company pursuant to
the Underwriting Agreement have been duly authorized and when delivered against
payment therefor as provided therein will be validly issued and outstanding,
fully paid and nonassessable and free of preemptive rights, and upon such
delivery, good and marketable title to such Firm Shares, free and clear of all
liens, encumbrances, security interests, equities or claims, will pass to the
Underwriters (other than any liens, encumbrances, security interests, equities
or claims
<PAGE> 4
The Robinson-Humphrey Company, Inc.
A.G. Edwards & Sons, Inc.
February __, 1997
Page 4
imposed by any Underwriter and assuming the Underwriters are purchasers in good
faith without notice of any adverse claim); there are no restrictions known to
us upon the voting or transfer of any of the currently outstanding shares of
capital stock of the Company (including the Firm Shares), except such
restrictions as are described in the Prospectus or as may be imposed by federal
and state securities laws.
7. The Registration Statement and the Prospectus (other than the
financial statements and the notes thereto and other financial and statistical
data and schedules included therein, as to which we express no opinion), comply
as to form in all material respects with the requirements of the Act; the
contracts and other documents filed as exhibits to the Registration Statement
and summarized in the Prospectus are accurately and fairly summarized therein
to the extent required in all material respects; and we do not know, after due
inquiry, of any contract or other documents of a character required to be
described in the Prospectus or in the Registration Statement or required to be
filed as an exhibit to the Registration Statement that are not filed or
described as required.
8. The Registration Statement has become effective under the Act
and, to our knowledge, after due inquiry, no stop order suspending the
effectiveness of the Registration Statement has been issued and no proceedings
for that purpose have been instituted or are pending, or threatened, by the
Commission.
9. None of the execution and delivery of the Underwriting Agreement,
the performance thereof by the Company, the sale of the Firm Shares by the
Company, nor the compliance by the Company with the provisions of the
Underwriting Agreement will conflict with or result in a breach or violation of
any of the terms or provisions of, or constitute a default under (with the
passage of time or otherwise), or result in the creation or imposition of any
lien, charge or encumbrance upon any of the property or assets of the Company
pursuant to the terms of any currently existing indenture, mortgage, deed of
trust, loan agreement or other material agreement or instrument known to us,
after due inquiry, to which the Company is a party, or to which the Company or
any of its properties or assets are subject (which conflicts, breaches,
violations or defaults would have a material adverse effect on the Company and
which have not been waived or cured), nor will such action result in a
violation of the provisions of the Articles of Incorporation or Bylaws of the
Company or any statute (other than state securities or Blue Sky laws as to
which we express no opinion), or to our knowledge, any judgment, order, rule
regulation or decree of any governmental instrumentality or court having
jurisdiction over the
<PAGE> 5
The Robinson-Humphrey Company, Inc.
A.G. Edwards & Sons, Inc.
February __, 1997
Page 5
Company or any of its properties or assets which violation would have a
material adverse effect on the Company.
10. To our knowledge, after due inquiry, there are no legal actions,
suits, or governmental proceedings to which the Company is a party pending or
threatened before any court or governmental agency, authority or body which, if
determined adversely to the Company, individually or in the aggregate is of a
character required to be disclosed in the Registration Statement and in the
Prospectus, which has not been properly disclosed therein.
11. To our knowledge, after due inquiry, the Company holds and is
operating in compliance in all material respects with all material franchises,
grants, authorizations, licenses, permits, easements, consents, certificates
and orders of any governmental or self-regulatory body required for the conduct
of its business, and all such licenses are valid and in full force and effect,
except in each case where the failure to hold or operate in compliance with any
such franchises, grants authorizations, licenses, permits, easements, consents
and orders would not have a material adverse effect on the business or
operations of the Company.
12. To our knowledge, after due inquiry, except as disclosed in the
Registration Statement and Prospectus, no person has any right to the
registration of any security of the Company by reason of the Company's filing
of the Registration Statement with the Commission or the consummation of the
transactions contemplated by the Underwriting Agreement or otherwise.
13. To our knowledge, after due inquiry, the Company is not in
violation of its Articles of Incorporation or in violation of its Bylaws where
such violation would have a material adverse effect on the Company, and to our
knowledge, after due inquiry, the Company is not, except as disclosed in the
Registration Statement or Prospectus, (i) in breach or violation of any order,
writ injunction or decree of any government, governmental instrumentality or
court, domestic or foreign, known to us, where such breach or violation would
have a material adverse effect on the financial condition or results of
operations of the Company; (ii) in conflict with or in violation of any law,
rule or regulation of the United States or any state in which its business
operations are conducted, where such conflict or violation would have a
material adverse effect on the financial condition or results of operations of
the Company; (iii) in breach or violation of, or in default under, and no event
has occurred which with lapse of time, notice or both would constitute a
default under, or result in the creation or imposition of a material lien,
charge or encumbrance upon its property or assets, pursuant to any instrument,
contract,
<PAGE> 6
The Robinson-Humphrey Company, Inc.
A.G. Edwards & Sons, Inc.
February __, 1997
Page 6
purchase order, indenture, mortgage, deed of trust, note, bank loan, credit
agreement, franchise, or any of its properties may be bound or affected, where
such breach, violation or default would have a material adverse effect on the
financial condition or results of operations of the Company.
In accordance with our understanding with the Company as to the scope of
our representation as special counsel for the Company in connection with the
offering of the Firm Shares, we have participated in conferences with officers
and other representatives of the Company, representatives of the independent
public accountants of the Company, and you and your counsel, at which the
contents of the Registration Statement and Prospectus were discussed and,
although we are not passing upon, do not assume responsibility for, and have
not verified the accuracy, completeness or fairness of the statements contained
in, the Registration Statement or the Prospectus, on the basis of the foregoing
(relying as to materiality upon the opinions of officers and other
representatives of the Company) and without independent check or verification,
nothing has come to our attention that leads us to believe either (i) that the
Registration Statement, at the time it became effective or on the date hereof,
contained or contains an untrue statement of a material fact or omitted or
omits to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which there
were made, not misleading; or (ii) that the Prospectus, as of the date the
Registration Statement became effective or on the date hereof, contained or
contains an untrue statement of a material fact or omitted or omits to state
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading; provided, however, that we express no opinion with respect to
the financial statements, notes and schedules and other financial or
statistical data included in the Registration Statement or the Prospectus.
With respect to matters stated to be true to our knowledge, our opinion
is based on such information as has come to our attention in the course of our
representation of the Company, and we have made no independent investigation
with respect thereto.
<PAGE> 7
The Robinson-Humphrey Company, Inc.
A.G. Edwards & Sons, Inc.
February __, 1997
Page 7
This opinion is furnished to you solely for the benefit of the
Underwriters and may not be otherwise used, circulated, quoted or referred to
without our prior written consent.
Very truly yours,
CORRERO FISHMAN HAYGOOD
PHELPS WEISS WALMSLEY & CASTEIX, L.L.P.
<PAGE> 1
EXHIBIT 10.20
US UNWIRED INC.
1997 STOCK OPTION PLAN
<PAGE> 2
US UNWIRED INC. 1997 STOCK OPTION PLAN
1. DEFINITIONS
The terms defined in this Section 1 shall, for all purposes of this Plan, have
the meanings herein specified:
(A) "Administrator" shall mean the Board of Directors or, if
appointed by the Board of Directors in accordance with Section 4
of this Plan, the Committee.
(B) "Board of Directors" shall mean the Board of Directors of the
Company, acting as such.
(C) "Committee" shall mean a Committee of the Board of Directors
described in Section 4 hereof.
(D) "Common Stock" shall mean the Company's Class A Common Stock, par
value $.01 per share, except as this definition may be modified
as provided in Section 11 hereof.
(E) "Company" shall mean US Unwired Inc., a Louisiana corporation.
(F) "Consultant" shall mean any person who is engaged by the Company
or a Subsidiary to render consulting services and is compensated
for such consulting services; provided that the term Consultant
shall not include directors who are not compensated for their
services or are paid only a director's fee by the Company.
(G) "Employee" or "Employees" shall mean key persons (including
directors and officers) employed by the Company, or a Subsidiary
thereof, on a full-time basis and who are compensated for such
employment by a regular salary.
(H) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(I) "Fair Market Value" shall, except as provided in Section 8
hereof, mean the closing sale price of the Common Stock on its
principal market on the date a Stock Option is granted or Limited
Stock Appreciation Rights are exercised (or, for purposes of
determining the value of shares of Common Stock used in payment
of the Option Price as provided in Section 9(C)(4), the date of
exercise) or, if there are no sales on such a date, on the next
following day on which there are sales.
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<PAGE> 3
(J) "Incentive Option" shall mean a Stock Option which is an
"incentive stock option" as defined in Section 422 of the
Internal Revenue Code of 1986, as amended.
(K) "Limited Stock Appreciation Rights" shall mean the right to
receive cash with respect to shares of Common Stock subject to a
Stock Option in lieu of exercising such Stock Option as described
in Section 8 hereof.
(L) "Non-Statutory Option" shall mean a Stock Option which does not
qualify as an Incentive Option as defined above.
(M) "Option" shall mean a Stock Option or Limited Stock Appreciation
Right granted by the Company pursuant to the Plan.
(N) "Optionee" shall mean a person who accepts an Option granted
under the Plan.
(O) "Option Price" shall mean the price to be paid for the shares of
Common Stock being purchased pursuant to a Stock Option
Agreement.
(P) "Option Period" shall mean the period from the date of grant of
an Option through the date after which such Option may no longer
be exercised. Nothing in this Plan shall be construed to extend
the termination date of the Option Period beyond the date set
forth in the Stock Option Agreement. No Option shall be
exercisable after the expiration of ten years from the date the
Option is granted.
(Q) "Outside Director" shall mean a member of the Board of Directors
who is not an Employee.
(R) "Plan" shall mean the US Unwired Inc. 1997 Stock Option Plan.
(S) "Qualifying Termination" shall mean (i) in the case of an
Employee, termination of the Employee's employment by the Company
involuntarily without cause, (ii) in the case of an Outside
Director, removal of the Outside Director from the Board of
Directors involuntarily without cause, and (iii) in the case of a
Consultant, termination by the Company or a Subsidiary of the
contract, agreement, arrangement or understanding pursuant to
which the Consultant serves the Company or a Subsidiary at a time
when the Consultant is not in breach of his or her obligations
thereunder. For purposes of this Plan, "cause" shall mean an act
of dishonesty, moral turpitude or an intentional or grossly
negligent act detrimental to the best interests of the Company or
a Subsidiary.
-3-
<PAGE> 4
(T) "Stock Option" shall mean an Incentive Option or a Non-Statutory
Option granted by the Company pursuant to the Plan to purchase
shares of Common Stock.
(U) "Stock Option Agreement" shall mean the written agreement between
the Company and Optionee confirming the Option and setting forth
the terms and conditions upon which it may be exercised.
(V) "Subsidiary" shall mean any corporation in which the Company
owns, directly or indirectly through Subsidiaries, at least 50%
of the total combined voting power of all classes of stock.
(W) "Successor" shall have the meaning set forth in Section 9(D)(4)
hereof.
2. PURPOSES
The purposes of the Plan are to promote the growth and profitability of the
Company by enabling it to attract and retain the best available personnel for
positions of substantial responsibility, to provide Outside Directors and
Employees and Consultants with an opportunity for investment in the Company's
Common Stock and to give them an additional incentive to increase their efforts
on behalf of the Company and its Subsidiaries.
3. EFFECTIVE DATE AND TERMINATION
The effective date of the Plan is January 16, 1997. No Stock Options or
Limited Stock Appreciation Rights may be granted under the Plan after December
31, 2006.
4. ADMINISTRATION
The Plan shall be administered by the Administrator, which shall be the Board
of Directors, except that the Board of Directors may appoint a committee
consisting solely of not less than two "non-employee directors" (as such term
is used in Rule 16b-3 under the Exchange Act) of the Company (the "Committee")
to administer the Plan. If the Committee is not appointed or, having been
appointed, is discontinued or otherwise ceases to serve as Administrator, then
the Administrator shall be the Board of Directors. No person shall be eligible
or continue to serve as a member of such Committee unless such person is an
"outside director" within the meaning of Section 162(m) of the Internal Revenue
Code of 1986, as amended ("Section 162(m)"). Members of the Committee shall
serve at the pleasure of the Board of Directors. Vacancies occurring in the
membership of the Committee shall be filled by appointment by the Board of
Directors. The Committee shall keep minutes of its meetings. A majority of
the Committee
-4-
<PAGE> 5
shall constitute a quorum thereof and the acts of a majority of the members
present at any meeting of the Committee at which a quorum is present, or acts
approved in writing by a majority of the entire Committee, shall be the acts of
the Committee.
5. ELIGIBILITY
Subject to the provisions of the Plan, the Administrator shall determine and
designate from time to time those Employees, Consultants and Outside Directors
to whom Options are to be granted and the number of shares of Common Stock
covered by such grants. In determining the eligibility of an Employee,
Consultant or Outside Director to receive an Option, as well as in determining
the number of shares covered by such Option, the Administrator shall consider
the position and responsibilities of the Employee, Consultant or Outside
Director being considered, the nature and value to the Company or a Subsidiary
of his or her services and accomplishments, his or her present and potential
contribution to the success of the Company or its Subsidiaries and such other
factors as the Administrator may deem relevant.
More than one Option may be granted to an individual. The maximum number of
shares, however, which may be granted under this Plan to any individual as
Options shall not exceed 10% of the maximum number of shares available under
the Plan, subject to adjustment in accordance with Section 11 hereof.
The aggregate Fair Market Value (determined as of the time the Stock Option is
granted) of the Common Stock with respect to which Incentive Options are
exercisable for the first time during any calendar year by an Employee,
Consultant or Outside Director under all plans of the Company and its
Subsidiaries shall not exceed the greater of $100,000 or such sum as may from
time to time be permitted under Section 422 of the Internal Revenue Code of
1986, as amended.
6. NUMBER OF SHARES AVAILABLE
Subject to adjustment as provided in Section 11 hereof, the aggregate number of
shares of Common Stock that may be granted as Options is 1,400,000. The Common
Stock to be offered under the Plan may be either authorized and unissued shares
or issued shares reacquired by the Company and presently or hereafter held as
treasury shares. The Board of Directors has reserved for the purposes of the
Plan a total of 1,400,000 of the authorized but unissued shares of Common
Stock, subject to adjustment in accordance with Section 11 hereof. If there
are any shares as to which an Option granted under the Plan shall remain
unexercised at the expiration thereof or shall be terminated unexercised, such
shares may be available for further grants under the Plan. To the extent that
a Limited Stock Appreciation Right granted in conjunction with a Stock Option
is exercised, such Stock Option shall be deemed to have been exercised and the
shares of Common Stock which otherwise would have been issued upon the exercise
of such Stock Option shall not be subject to the grant of any further Options.
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<PAGE> 6
7. TYPES OF STOCK OPTIONS
The Administrator shall have full and complete authority, in its discretion,
subject to the provisions of the Plan, to grant Stock Options and to determine
whether a Stock Option granted under the Plan shall be an Incentive Option or a
Non-Statutory Option. Non-Statutory Options shall be identified as such in the
Stock Option Agreement. The Administrator may include Limited Stock
Appreciation Rights (as provided by Section 8 hereof) in connection with a
Stock Option, either at the time of grant or, in the case of a Non-Statutory
Option, at a later date.
8. LIMITED STOCK APPRECIATION RIGHTS AND ACCELERATION OF THE EXERCISE DATE
OF STOCK OPTIONS FOLLOWING CHANGE IN CONTROL
(A) Limited Stock Appreciation Rights may be granted in connection
with all or part of a Stock Option granted under this Plan,
either at the time of grant of such Stock Option or, in the case
of a Non-Statutory Option, at any time thereafter during the term
of the Stock Option.
(B) Limited Stock Appreciation Rights shall entitle the holder of a
Stock Option in connection with which such Limited Stock
Appreciation Rights are granted, upon exercise of the Limited
Stock Appreciation Rights, to surrender the Stock Option, or any
applicable portion thereof, to the extent unexercised, and to
receive an amount of cash determined pursuant to subparagraph (3)
of paragraph (C) of this Section 8. Such Stock Option, shall, to
the extent so surrendered, thereupon cease to be exercisable.
(C) Limited Stock Appreciation Rights shall be subject to the
following terms and conditions and to such other terms and
conditions not inconsistent with the Plan as shall from time to
time be approved by the Administrator.
(1) Limited Stock Appreciation Rights shall in no event be
exercisable unless and until the holder of the Limited
Stock Appreciation Rights shall have completed at least
six months of continuous service with the Company or a
Subsidiary, or both, immediately following the date upon
which the Limited Stock Appreciation Rights shall have
been granted and shall be exercisable only at such time or
times and to the extent that the related Stock Option is
exercisable.
(2) Upon exercise of Limited Stock Appreciation Rights, the
holder thereof shall be entitled to receive an amount of
cash in respect of each share of Common Stock subject to
the related Stock Option equal to the excess of the fair
market value of such share on the date the Limited Stock
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<PAGE> 7
Appreciation Right is exercised over the Option Price of
such related Stock Option.
(D) To the extent that Limited Stock Appreciation Rights shall be
exercised, the Stock Option in connection with which such Limited
Stock Appreciation Rights shall have been granted shall be deemed
to have been exercised. To the extent that the Stock Option in
connection with which Limited Stock Appreciation Rights shall
have been granted shall be exercised, the Limited Stock
Appreciation Rights granted in connection with such Option shall
be cancelled.
9. TERMS OF OPTIONS
The grant of each Option shall be confirmed by a Stock Option Agreement (in the
form prescribed by the Administrator) which shall be executed by the Company
and the Optionee as promptly as practicable after such grant. The Stock Option
Agreement shall expressly state or incorporate by reference the provisions of
this Plan.
(A) OPTION PRICE. Subject to adjustment as provided in Section 11
hereof, the Administrator at the time a Stock Option is granted
shall determine the Option Price which shall be not less than
100% of the Fair Market Value of the Company's Common Stock on
the date of grant.
(B) OPTION PERIODS. The term of each Option granted under this Plan
shall be for such period as the Administrator shall determine,
but not more than ten years from the date of grant thereof,
subject to earlier termination as hereinafter provided in
paragraph (D) of this Section 9.
(C) EXERCISE OF OPTIONS. Each Option granted under this Plan may be
exercised to the extent exercisable, in whole or in part at any
time during the Option Period, for such number of shares as shall
be prescribed by the provisions of the Stock Option Agreement
evidencing such Option, provided that:
(1) An Option may be exercised (a) during the continuance of
the Optionee's employment by the Company or a Subsidiary
in accordance with the provisions of paragraph (E) of this
Section 9, or (b) after termination of the Optionee's
employment by the Company or a Subsidiary in accordance
with the provisions of paragraph (D) of this Section 9.
(2) Limited Stock Appreciation Rights may not be exercised
prior to six months immediately following the date upon
which such Limited Stock Appreciation Rights are granted.
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<PAGE> 8
(3) An Option may be exercised by the Optionee or a Successor
only by written notice (in the form prescribed by the
Administrator) to the Company specifying the number of
shares to be purchased.
(4) The aggregate Option Price of the shares as to which a
Stock Option may be exercised shall be, in the discretion
of the Administrator, (a) paid in U.S. funds by any one
or any combination of the following: cash, (including
check, draft or wire transfer made payable to the order of
the Company), or delivery of Common Stock certificates
endorsed in blank or accompanied by executed stock powers
with signatures guaranteed by a national bank or trust
company or a member of a national securities exchange
evidencing shares of Common Stock which have been held for
more than one year, whose value shall be deemed to be the
Fair Market Value on the date of exercise of such Common
Stock, or (b) paid on a deferred basis (if permitted by
Louisiana law), and upon such terms and conditions,
including provision for securing the payment of the same,
as the Administrator, in its discretion, shall provide, or
(c) deemed to be paid in full provided the notice of the
exercise of a Stock Option is accompanied by a copy of
irrevocable instructions to a broker to promptly deliver
to the Company the amount of sale or loan proceeds
sufficient to cover the Option Price. Payment of the
Option Price with certificates evidencing shares of Common
Stock as provided above shall not increase the number of
shares available for the grant of Options under the Plan.
As soon as practicable after receipt by the Company of notice of exercise and
of payment in full of the Option Price of the shares with respect to which a
Stock Option has been exercised, a certificate or certificates representing
such shares shall be registered in the name or names of the Optionee or his
Successor and shall be delivered to the Optionee or his Successor at Lake
Charles, Louisiana. If any part of the Option Price is paid on a deferred
basis, the shares for which payment has been deferred shall be registered in
the name of the Optionee or his Successor but the certificate or certificates
representing such shares shall not be delivered to the Optionee or his
Successor until the Option Price for such shares has been paid in full.
(D) TERMINATION OF EMPLOYMENT. The effect of termination of an
Optionee's employment with the Company or a Subsidiary shall be
as follows:
(1) Involuntary Termination. If a Qualifying Termination
shall occur with respect to an Optionee, any outstanding
Options held by such Optionee may be exercised at any time
prior to the expiration date of such Options or within
three months after the date of such Qualifying
Termination,
-8-
<PAGE> 9
whichever is the shorter period; provided, however, that
such Options were exercisable on the date of such a
Qualifying Termination under the provisions of any
applicable agreements relating thereto, or the
Administrator specifically waives the restrictions
relating to exercisability, if any, contained in such
agreements.
(2) Disability Termination. If (a) the employment of an
Optionee who is an Employee, (b) the service on the Board
of Directors by an Optionee who is an Outside Director, or
(c) the contract or agreement pursuant to which an
Optionee who is a Consultant serves the Company or a
Subsidiary, is terminated by the Company or a Subsidiary
because, in the opinion of the Administrator, the Optionee
has become physically incapacitated, any outstanding
Options held by such Optionee may be exercised at any time
prior to the expiration date of such Options; whether or
not such Options were exercisable on the date of such
termination under any provisions of the applicable
agreements relating thereto. For the purposes of this
Plan the question whether the termination of employment
shall be considered a disability termination caused by
physical incapacity shall be determined in each case by
the Administrator and such determination by the
Administrator shall be final.
(3) Retirement. If an Optionee's employment terminates as the
result of retirement of the Optionee under any retirement
plan of the Company or a Subsidiary, he may exercise any
outstanding Option at any time prior to the expiration
date of the Option; provided, however, that such Options
were exercisable on the date of such termination under the
provisions of the applicable agreements relating thereto,
or the Administrator specifically waives the restrictions
relating to exercisability, if any, contained in such
agreements.
(4) Death.
(a) Upon the death of an Optionee, the Optionee's
Options may be exercised by the person or persons
entitled to do so under a beneficiary designation
in accordance with paragraph (E) of this Section 9
or, if none, under the Optionee's will or, if the
Optionee shall have failed to designate a
beneficiary or make testamentary disposition of
such Options or shall have died intestate, by the
Optionee's legal representative or representatives
(such person, persons, representative or
representatives are referred to herein as the
"Successor" of an Optionee).
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<PAGE> 10
(b) If an Optionee shall die while the Optionee is an
Employee, or is serving as an Outside Director or
as a Consultant, the Successor may exercise the
Optionee's Options at any time prior to the
expiration date of such Options; whether or not
such Options were exercisable on the date of the
Optionee's death under the provisions of the
applicable agreements relating thereto.
(c) If the Optionee shall die within three months after
the occurrence of a Qualifying Termination, the
Optionee's Options may be exercised by the
Successor at any time prior to the expiration date
of such Options or within one year of the date of
the Optionee's death, whichever is the shorter
period, provided, however, that such Options were
exercisable on the date of the Qualifying
Termination, or the Administrator specifically
waives the restrictions relating to exercisability.
(5) Other Termination. If the employment of an Optionee who
is an employee, the service on the Board of an Optionee
who is an Outside Director, or the contract or agreement
pursuant to which any Optionee who is a Consultant serves
the Company or a Subsidiary shall terminate for any reason
other than as set forth in subparagraphs (1), (2), (3) or
(4) above, his or her rights under any then outstanding
Options shall terminate at the time of such termination of
employment; provided, however, the Administrator may, in
its sole discretion, take such action as it considers
appropriate to waive such automatic termination and/or the
restrictions, if any, contained in the applicable
agreements relating thereto.
(6) Extension of Option Exercise Periods. Notwithstanding the
Option termination provisions set forth above, at the
request of an Optionee or his Successor, but in the
Administrator's sole discretion, the Administrator may at
any time prior to the termination of an Option, extend the
period during which the Option may be exercised following
the termination of an Optionee's employment for any period
up to the remaining Option Period for the Option.
(E) NON-TRANSFERABILITY. Unless otherwise designated by the
Administrator to the contrary, each Option granted under the Plan
shall by its terms be non-transferable by the Optionee (except by
will or the laws of descent and distribution), and each Option
shall be exercisable during the Optionee's lifetime only by the
Optionee, his or her guardian or legal representative or by such
other
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<PAGE> 11
means as the Administrator may approve from time to time that is
not inconsistent with or contrary to the provisions of either
Section 16(b) of the Exchange Act or Rule 16b-3, as either may be
amended from time to time, or any law, rule, regulation or other
provision that may hereafter replace such Rule. An Optionee may
also designate a beneficiary to exercise his or her Options after
the Optionee's death. The Administrator may amend outstanding
Options to provide for transfer, without payment of
consideration, to immediate family members of the Optionee or to
trusts or partnerships for such family members. Any Limited
Stock Appreciation Right issued in conjunction with an Incentive
Option is transferable only when such Option is transferable and
under the same conditions.
(F) OTHER TERMS. Options granted pursuant to the Plan shall contain
such other terms, provisions and conditions (which need not be
identical) not inconsistent herewith as shall be determined by
the Administrator.
10. LISTING AND REGISTRATION OF SHARES
If at any time the Board of Directors shall determine, in its discretion, that
the listing, registration or qualification of any of the shares subject to
Options under the Plan upon any securities exchange or under any state or
federal law, or the consent or approval of any governmental regulatory body, is
necessary or desirable as a condition of or in connection with the purchase or
issue of shares thereunder, no outstanding Options, the exercise of which would
result in the purchase or issuance of shares, may be exercised in whole or in
part unless such listing, registration, qualification, consent or approval
shall have been effected or obtained free of any conditions not acceptable to
the Board of Directors. The Board of Directors may require any person
exercising an Option to make such representations and furnish such information
as it may consider appropriate in connection with the issuance or delivery of
the shares in compliance with applicable law and shall have the authority to
cause the Company at its expense to take any action related to the Plan which
may be required in connection with such listing, registration, qualification,
consent or approval.
11. ADJUSTMENTS
In the event that a dividend shall be declared upon the Common Stock payable in
shares (other than treasury shares) of Common Stock, the number of shares of
Common Stock then subject to any Option outstanding under the Plan and the
number of shares reserved for the grant of Options pursuant to the Plan but not
yet subject to an Option shall be adjusted by adding to each such share the
number of shares which would be distributable in respect thereof if such shares
had been outstanding on the date fixed for determining the shareholders of the
Company entitled to receive such stock dividend. In the event that the
outstanding shares of Common Stock shall be changed into or exchanged for a
different number or kind of shares of stock or other securities
-11-
<PAGE> 12
of the Company or of another corporation, whether through reorganization,
recapitalization, stock split-up, combination of shares, merger or
consolidation, then there shall be substituted for each share of Common Stock
subject to any such Option and for each share of Common Stock reserved for the
grant of Options pursuant to the Plan but not yet subject to an Option, the
number and kind of shares of stock or other securities into which each
outstanding share of Common Stock shall have been so changed or for which each
such share shall have been exchanged. In the event there shall be any change,
other than as specified above in this Section 11, in the number or kind of
outstanding shares of Common Stock or of any stock or other securities into
which such Common Stock shall have been changed or for which it shall have been
exchanged, then if the Board of Directors shall in its sole discretion
determine that such change equitably requires an adjustment in the number or
kind of shares theretofore reserved for the grant of Options pursuant to the
Plan but not yet subject to an Option and of the shares then subject to an
Option or Options, such adjustment shall be made by the Board of Directors and
shall be effective and binding for all purposes of the Plan and of each Option
outstanding thereunder. In the case of any such substitution or adjustment as
provided for in this Section 11, the Option Price for each share of stock or
other security which shall have been substituted for each share of Common Stock
covered by an outstanding Option shall be adjusted appropriately to reflect
such substitution or adjustment. No adjustment or substitution provided for in
this Section 11 shall require the Company to sell a fractional share of Common
Stock, and the total substitution or adjustment with respect to each
outstanding Option shall be limited accordingly.
Upon any adjustment made pursuant to this Section 11 the Company will, upon
request, deliver to the Optionee or to his Successors a certificate of its
Secretary setting forth the Option Price thereafter in effect and the number
and kind of shares or other securities thereafter purchasable on the exercise
of such Option.
12. WITHHOLDING TAXES
The Company unilaterally or by arrangement with the Optionee shall make
appropriate provision for satisfaction of withholding taxes in the case of any
grant, award, exercise or other transaction which gives rise to a withholding
requirement. An Optionee or other person receiving shares issued upon exercise
of a Non-Statutory Option shall be required to pay the Company or any
Subsidiary in cash the amount of any taxes which the Company or Subsidiary is
required to withhold.
Notwithstanding the preceding sentence and subject to such rules as the
Administrator may adopt, Optionees who are subject to Section 16(b) of the
Exchange Act, and, if determined by the Administrator, other Optionees, may
satisfy the obligation, in whole or in part, by election on or before the date
that the amount of tax required to be withheld is determined, to have the
number of shares received upon exercise of the Non-Statutory Option reduced by
a number of shares having a fair market value equal to the amount of the
required withholding to be so
-12-
<PAGE> 13
satisfied or to surrender to the Company previously held shares of Common Stock
having an equivalent fair market value.
13. INTERPRETATION, AMENDMENTS AND TERMINATION
If and when the Administrator is the Committee, all actions taken by the Board
of Directors pursuant to this Section 13 shall be taken only in accordance with
the recommendation of such Committee. Subject to the foregoing, the Board of
Directors may make such rules and regulations and establish such procedures for
the administration of the Plan as it deems appropriate. In the event of any
dispute or disagreement as to the interpretation of this Plan or of any rule,
regulation or procedure, or as to any question, right or obligation arising
from or related to the Plan, the decision of the Board of Directors shall be
final and binding upon all persons. The Board of Directors may amend this Plan
as it shall deem advisable, except that the Board of Directors may not, without
further approval of the shareholders of the Company, (a) increase the total
number of shares of Common Stock which may be granted under the Plan, (b)
change the manner of determining the Option Price set forth in Section 9(A)
hereof, (c) permit any Option to be exercised more than ten years after the
date it was granted or increase the number of shares that may be received by
any one individual pursuant to Section 5 hereof, (d) amend any provision of
this Section 13 or (e) withdraw the administration of the Plan from a committee
of directors meeting the requirements of Section 4 hereof. The Board of
Directors may, in its discretion, terminate this Plan at any time. Termination
of the Plan shall not affect the rights of Optionees or their Successors under
any Options outstanding and not exercised in full on the date of termination.
Subject to the foregoing and the requirements of Section 162(m), the Board of
Directors may without further action on the part of the shareholders of the
Company or the consent of participants, amend the Plan, (a) to permit or
facilitate qualification of Options thereafter granted under the Plan as
Incentive Options, and (b) to preserve the employer deduction under Section
162(m).
15. COMPLIANCE WITH SECTION 162(M)
With respect to employees subject to Section 162(m), transactions under the
Plan are intended to avoid loss of the deduction referred to in paragraph (1)
of Section 162(m). Anything in the Plan or elsewhere to the contrary
notwithstanding, to the extent any provision of the Plan or action by the
Administrator fails to so comply or avoid the loss of such deduction, it shall
be deemed null and void, to the extent permitted by law and deemed advisable by
the Administrator concerned with matters relating to employees subject to
Section 162(m).
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<PAGE> 14
16. NOTICES
All notices under the Plan shall be in writing, and if to the Company, shall be
delivered to the Secretary of the Company or mailed to its principal office,
Post Office Drawer 3104, Lake Charles, Louisiana 70602-3104, addressed to the
attention of the Secretary; and if to the Optionee, shall be delivered
personally or mailed to the Optionee at the address appearing in the payroll
records of the Company or a Subsidiary. Such addresses may be changed at any
time by written notice to the other party.
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<PAGE> 1
EXHIBIT 23.1
INDEPENDENT AUDITORS' REPORT ON
FINANCIAL STATEMENT SCHEDULE AND CONSENT
The Board of Directors
US Unwired Inc.:
The audits referred to in our report dated December 13, 1996, except as to
note 15 which is as of January 16, 1997, included the related financial
statement schedule for each of the years in the three-year period ended December
31, 1995, included in the registration statement. This financial statement
schedule is the responsibility of the Company's management. Our responsibility
is to express an opinion on this financial statement schedule based on our
audits. In our opinion, such financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
We consent to the use of our reports included herein and to the references
to our firm under the headings "Selected Consolidated Financial Data" and
"Experts" in the prospectus.
KPMG Peat Marwick LLP
New Orleans, Louisiana
January 17, 1997
<PAGE> 1
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Miscellco Communications, Inc.
We consent to the use of our report included herein and to the reference to
our firm under the heading "Experts" in the prospectus.
KPMG Peat Marwick LLP
New Orleans, Louisiana
January 17, 1997
<PAGE> 1
EXHIBIT 23.3
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
West Alabama Cellular Telephone Company, Inc.:
We consent to the use of our report included herein and to the reference to
our firm under the heading "Experts" in the prospectus.
KPMG Peat Marwick LLP
New Orleans, Louisiana
January 17, 1997
<PAGE> 1
EXHIBIT 23.4
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Alabama 4 System
We consent to the use of our report included herein and to the reference to
our firm under the heading "Experts" in the prospectus.
KPMG Peat Marwick LLP
New Orleans, Louisiana
January 17, 1997
<PAGE> 1
EXHIBIT 23.5
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
US Unwired Inc.
We consent to the use in this Amendment No. 2 to the Registration Statement
of Mercury, Inc. on Form S-1 of our report dated March 3, 1994, appearing in the
Prospectus, which is part of the Registration Statement.
We also consent to the reference to us under the heading "Experts" in such
Prospectus.
SMITH, TURNER & REEVES, APA
January 17, 1997
Jackson, Mississippi
<PAGE> 1
EXHIBIT 23.6
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Alabama 4 System
We consent to the reference to our firm under the caption "Experts" and to
the use, in Amendment Number 2 to the Form S-1 Registration Statement to be
filed by US Unwired Inc. on or about January 17, 1997, for the registration of
1,700,000 shares of the Company's Class A Common Stock, of our report dated
December 16, 1995 relating to the financial statements of Dominion Cellular Inc.
(Alabama 4 System) for the years ended September 30, 1995, and 1994.
ELLIOT H. GOLDBERG, CPA, P.C.
Rockville Centre, New York
January 17, 1997
